The Internal Revenue Service (IRS) has announced the cost-of-living adjustments applicable to dollar limitations for pension plans and other amounts for 2009. Many of the limits have changed.
This special edition of Foley's Legal News Alert contains a table showing the 2009 and 2008 amounts so that users can easily determine those values that have changed.
Changes affecting 401(k) elective deferrals include:
The maximum exclusion for elective deferrals increases from $15,500 to $16,500
The annual compensation limit increases from $230,000 to $245,000
The maximum annual addition to defined contribution plans, generally, increases from $46,000 to $49,000
This Legal News Alert should be forwarded to persons in charge of determining which employees of publicly traded companies are "specified employees" for Internal Revenue Code Section 409A purposes.
As in previous years, the IRS advises that administrators of defined benefit or defined contribution plans that have received favorable determination letters should not request new determination letters solely because of yearly amendments to adjust maximum limitations in the plan.
2009 LIMITATIONS FOR EMPLOYEE BENEFIT PLANS
To print a copy of the table below, please click here.
|
2008 |
2009 |
|
|
§401(k) Deferrals / 403(b) Deferrals (§402(g)(1)) |
$15,500 |
$16,500 |
|
Catch-up Contributions for Individuals Age 50 or Older |
|
|
|
Compensation Limit (§401(a)(17)) |
$230,000 |
$245,000 |
|
Defined Benefit Limit (§415(b)(1)(A)) |
$185,000 |
$195,000 |
|
Defined Contribution Limit (§415(c)(1)(A)) |
$46,000 |
$49,000 |
|
Highly Compensated Employees (HCEs) Nondiscrimination Testing Threshold (414(q)(1)(B)) Pay Exceeding * |
$105,000 * |
$110,000 * |
|
Key Employee Officer Compensation Threshold |
|
|
|
Social Security Limits |
||
|
Old-Age, Survivors, and Disability Insurance (OASDI) Tax Rate |
6.2 percent |
6.2 percent |
|
OASDI Taxable Wage Base |
$102,000 |
$106,800 |
|
Medicare Tax Rate |
1.45 percent |
1.45 percent |
|
Medicare Taxable Wage Base |
All Wages |
All Wages |
|
Self-Employed OASDI Tax Rate |
12.4 percent |
12.4 percent |
|
Self-Employed Medicare Tax Rate |
2.9 percent |
2.9 percent |
|
Other Indexed Limits |
||
|
§457 Deferrals (§457(e)(15)) |
$15,500 |
$16,500 |
|
Simplified Employee Pension Plan (SEP) Maximum Pay (§408(k)(3)(C)) |
$230,000 |
$245,000 |
|
SEP Eligibility Pay Threshold (§408(k)(2)(C)) |
$500 |
$550 |
|
SIMPLE Salary Reduction Maximum (§408(p)(2)(E)) |
$10,500 |
$11,500 |
|
Exclusion for Transportation in a Commuter Highway Vehicle and Any Transit Pass per Month (§132(f)(2)(A)) |
|
$120 |
|
Exclusion for Qualified Parking per Month (§132(f)(2)(B)) |
|
|
|
Employee Stock Ownership Plan (ESOP) Payouts in Excess of Five Years (§409(o)(1)(C)) |
||
|
$185,000 |
$195,000 |
|
$935,000 |
$985,000 |
* Current year classification is based on prior year compensation and limit. Nondiscrimination testing for 2009 will generally rely on the 2008 limitation of $105,000 for determining HCEs, and the new limitation of $110,000 will apply for 2010 nondiscrimination testing. Employers may, but are not required to, apply the top-paid 20 percent test in conjunction with this compensation limit.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
