It is never too early to start planning for the 2007 taxes. The max 401k contribution for 2007 will be increased by $500 to $15,500 while 2008’s limit should be close to $16,000 and 2009’s limit be around $16,500. 2008 and 2009’s limit are not set in stone yet and are determined by the cost of living increase. I doubt the cost of living, according to the IRS will be more than the 3% figure they have been using.

401k contribution is all done pretax so take advantage of reducing your taxable income, especially if you are in the higher bracket and even more so if your employer matches part of your contribution.

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