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Monday, October 24, 2011

 Last week, the IRS issued a press release announcing its 2012 cost-of-living adjustments for retirement plans. The chart below reflects the qualified plan limits for calendar years 2009-2012.

 

Type of Limitation

 

2012

 

2011 

 

2010

 

2009

         

Elective Deferrals (401(k) and 403(b); not including adjustments and catch-ups)

$17,000

$16,500

$16,500

$16,500 

457(b)(2) and 457(c)(1) Limits (not including catch-ups)

$17,000

$16,500

$16,500

$16,500

Section 414(v) Catch-Up Deferrals to 401(k), 403(b), 457(b), or SARSEP Plans (1)

$5,500

$5,500

$5,500 

$5,500 

SIMPLE 401(k) or regular SIMPLE plans, Catch-Up Deferrals

$2,500

$2,500

$2,500

$2,500 

415 limit for Defined Benefit Plans

$200,000

$195,000

$195,000 

$195,000 

415 limit for Defined Contribution Plans

$50,000

$49,000 

$49,000 

$49,000

Annual Compensation Limit

$250,000

$245,000

$245,000 

$245,000

Annual Compensation Limit for Grandfathered Participants in Governmental Plans Which Followed 401(a)(17) Limits (With Indexing) on July 1, 1993

 

$375,000

 

$360,000

 

$360,000

 

$360,000

Highly Compensated Employee 414(q)(1)(B)

$115,000 

$110,000

$110,000 

$110,000

Key employee in top heavy plan (officer)

$165,000

$160,000 

$160,000

$160,000 

SIMPLE Salary Deferral

$11,500

$11,500

$11,500 

$11,500 

Tax Credit ESOP Maximum balance

$1,015,000

$985,000 

$985,000

$985,000 

Amount for Lengthening of 5-Year ESOP Period

$200,000 

$195,000

$195,000 

$195,000

Taxable Wage Base

$110,100

$106,800

$106,800 

$106,800 

FICA Tax for employees and employers (2)

        7.65%

        7.65%

       7.65%

       7.65%

Social Security Tax for employees and employers (2)

        6.2%

        6.2%

       6.2%

       6.2%

Medicare Tax for employees and employers

        1.45%

        1.45%

       1.45%

      1.45%

Reflects the issuance of IRS News Release IR-2011-103, October 20, 2011

(1) This number is only the catch-up available under Code Section 414(v).  Code Sections 457(b)(3) and 402(g) provide separate catch-up rules, which must also be considered in appropriate cases.

(2) For 2011 only, the employee portion of Social Security tax was reduced to 4.2% (instead of 6.2%), for a total FICA tax of 5.65%.  This payroll tax holiday was legislated as part of the Tax Relief Act of 2010 and will revert back to 6.2% in 2012.

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