Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
On October 16, 2008, the Internal Revenue Service issued IR 2008-118, announcing the cost-of-living adjustments applicable to retirement plan limits for 2009. Most of the limits increase for 2009, as the increase in the cost-of-living index met the statutory threshold that triggers the adjustment. A summary of the current 2008 limits and the new 2009 limits follows:
Retirement Plan Limits
|
2008 |
2009 |
|
|
Maximum Elective Deferral Limit Under 402(g) |
$15,500 |
$16,500 |
|
SIMPLE Plan Salary Deferral Limit (408(p)) |
$10,500 |
$11,500 |
|
Maximum Catch-Up Contribution Limit Under 414(v) |
$5,000 |
$5,500 |
|
Maximum Catch-Up Contribution Limit Under 401(k)(11) and 408(p) |
$2,500 |
$2,500 |
|
Defined Benefit Plan - 415 Annual Benefit Limit |
$185,000 |
$195,000 |
|
Defined Benefit Plan Compensation Multiplier—for participants who separated from service prior to January 1, 2009 |
1.0236 |
1.0530 |
|
Defined Contribution Plan - 415 Annual Addition Limit |
$46,000 |
$49,000 |
|
Annual Compensation Limit Under 401(a)(17), 404(l) and 408(k) |
$230,000 |
$245,000 |
|
Special Annual Compensation Limit for Governmental Plans in effect on July 1, 1993 |
$345,000 |
$360,000 |
|
Highly Compensated Employee Definition (414(q)) |
$105,000 |
$110,000 |
|
Key Employees (416 Top Heavy Compensation for Officers) |
$150,000 |
$160,000 |
|
Maximum ESOP Account Balance Subject to Five-Year Distribution Period |
$935,000 |
$985,000 |
|
ESOP Dollar Amount used to determine the lengthening of the Five-Year Distribution Period |
$185,000 |
$195,000 |
Social Security Wage Base
The Social Security Administration also announced on October 16, 2008 a $4,800 increase in the wage base for computing the Social Security tax (OASDI) for 2009 (http://www.ssa.gov/pressoffice/pr/2009cola-pr.htm). The increase of $4,800 raises the Social Security tax wage base from $102,000 in 2008 to $106,800 in 2009.
J. René Toadvine is a Shareholder in Littler Mendelson's Charlotte office. If you would like further information, please contact your Littler attorney at 1.888.Littler, info@littler.com, or Mr. Toadvine at rtoadvine@littler.com.
