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Plan Insight

MARCH 2010 Newsletter

Pension Plan Limits For The Tax Year 2010

The Internal Revenue Service announced on October 15, 2009, the cost-of-living adjustments applicable to dollar limitations for pension plans and other items for Tax Year 2010.

Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Commissioner annually adjust these limits for cost-of-living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under Section 415. Under Section 415(d), the adjustments are to be made pursuant to adjustment procedures which are similar to those used to adjust benefit amounts under Section 215(i)(2)(A) of the Social Security Act.

The limitations that are adjusted by reference to Section 415(d) will remain unchanged for 2010. This is because the cost-of-living index for the quarter ended September 30, 2009, is less than the cost-of-living index for the quarter ended September 30, 2008, and, following the procedures under the Social Security Act for adjusting benefit amounts, any decline in the applicable index cannot result in a reduced limitation. For example, the limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) will be $16,500 for 2010, which is the same amount as for 2009. This limitation affects elective deferrals to Section 401(k) plans and to the Federal Government’s Thrift Savings Plan, among other plans.

401k Plan Limits for Plan Year

2010

401k Elective Deferrals 

$16,500

Annual Defined Contribution Limit

$49,000

Annual Compensation Limit

$245,000

Catch-Up Contribution Limit

$5,500

Highly Compensated Employees 

$110,000

 

  

NON 401K RELATED LIMITS

  

403(b)/457 Elective Deferrals 

$16,500

SIMPLE Employee Deferrals

$11,500

SIMPLE Catch-Up Deferral

$2,500

SEP Minimum Compensation

$550

SEP Annual Compensation Limit

$245,000

Social Security Wage Base

$106,800

Please contact us if you have any questions regarding 2010 plan limits and how they might affect your plan.

 

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Information is provided for review and consideration only. Please consult legal and tax advisors for practical advice pertaining to your business and personal situations.

This page was last reviewed and/or updated on Friday, August 13, 2010 10:46 AM

 
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