The Internal Revenue Code limits the benefits and contributions to many retirement plans and requires the IRS to reevaluate the limits annually and make adjustments when a cost-of-living increase is justified.

Retirement plan computations are indexed to inflation and as a result didn't change from 2007 to 2008, but they will change for the 2009 tax year, the IRS says.

Q: What changes has the IRS made in retirement account contributions for the 2009 tax year?

A: The change most people should be aware of is whether their 401(k) contribution limit will change. For 2009, it will. The amount of money you can put away in your 401(k) and other qualified plans will increase from $15,500 to $16,500.

Catch up contributions - the amount of additional money you can put in your account if you're 50 and older - was increased by $500 from $5,000 to $5,500. So, for those in that age group, up to $22,000 can be put away next year.

HIGHLY COMPENSATED WORKERS

One figure the IRS releases each October is watched closely by employers offering 401(k) accounts. It is the salary level that defines a highly compensated employee. That figure was increased from $105,000 to $110,000 for next year.

Businesses care about this because federal law requires retirement plans to be fairly balanced between highly compensated workers and those making less. Such laws were implemented to keep retirement plans from being designed to favor executives and other highly paid workers.

Companies offering plans must run a test and determine whether they meet the government requirements. If the plan has become too top-heavy with more than the allowed number of highly compensated workers, the employer may limit the amount those workers can contribute.

It's not uncommon for highly paid workers to be limited to $6,000 or $7,000 in contributions while co-workers who make less can contribute the full $16,500 next year, said Rick Meigs, president of the Portland, Ore.-based 401khelpcenter.com.

SELF EMPLOYED

For self-employed individuals with a simplified employee pension - a SEP plan - or a solo 401(k) designed for independent contractors such as consultants or real estate agents and sole proprietors, the contribution limit increases from $46,000 to $49,000.

SOCIAL SECURITY CAP

One number the IRS adjusts each year is watched closely by some workers but most are likely not even aware of it. It is the Social Security wage base figure, which is the salary level at which an employee is freed from paying the 7 1/2 percent Social Security tax.

Many American workers may not even realize that workers who reach a certain pay level in a given year, no longer have to pay the tax.

The figure increases from the current $102,000 to $106,800 for the 2009 tax year.

Meigs said people who are near that salary range watch the figure closely each year, hoping that they will at some point cross that threshold and get at least a couple of paychecks around Christmas free of the tax. It amounts to a 7 1/2 percent tax-free pay raise for at least a few pay periods.

For those workers, they'll begin to pay the tax again in January until they reach the new salary figure, which is increased each year because it is tied to the rate of inflation.