The Internal Revenue Service has decided to keep contribution limits for 401(k)s, IRAs and other retirement accounts unchanged in 2010, rather than lowering them, as some had feared due to negative inflation. The Labor Department reported Thursday that the consumer price index has fallen 1.3% over the past 12 months.

Thus, the maximum amount workers can contribute to their 401(k) is still $16,500 with an additional $5,500 permitted for those 50 and older. IRA contributions remain at $5,000 for those under 50 and at $6,000 for those 50 or older.

Had the IRS lowered the limit, it could have discouraged investors from participating in their retirement accounts, said Jacque Mohs, vice president with Principal Financial Group. “We think now is not the time to cut back. It is time to continue to save more for retirement, especially in a market recovery time. You don’t want to be out of the market. Now is the time to invest and have some of that dollar cost averaging.”

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