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Maximum Pension Benefit and Contribution Limits for 2008-2012

As published by the Internal Revenue Service October 20, 2011.

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  2012 2011 2010 2009 2008
Elective Deferrals (401k & 403b plans) $17,0003 $16,5003 $16,5003 $16,5003

$15,500

Annual Benefit Limit $200,0001 $195,0001 $195,0001 $195,0001 $185,000
Annual Contribution Limit $50,0002 $49,0002 $49,0002 $49,0002 $46,000
Annual Compensation Limit $250,0005 $245,0005 $245,0005 $245,0005 $230,000
403(b)/457 Deferral Limit $17,0003 $16,5003 $16,5003 $16,5003

$15,500

Highly Compensated Threshold $115,0006 $110,0006 $110,0006 $110,0006 $105,000
SIMPLE Contribution Limit

$11,5009

(no change)

$11,5009 $11,5009 $11,5009

$10,500

SEP Coverage

$550

(no change)

$550 $550 $550 $500
SEP Compensation Limit $250,0005 $245,0005 $245,0005 $245,0005 $230,000
Income Subject to Social Security $110,100 $106,800 $106,800 $106,800 $102,000
Top-Heavy Plan Key Employee Comp $165,000 $160,000 $160,000 $160,000 $150,000
Catch-Up Contributions

$5,5004

(no change)

$5,5004 $5,5004 $5,5004

$5,000

SIMPLE Catch-Up Contributions

$2,50010

(no change)

$2,50010

(no change)

$2,50010

(no change)

$2,50010

(no change)

$2,500

Source: http://www.IRS.gov

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Legend:

1 EGTRRA provides the lesser of $160,000, with Cost of Living Adjustment (COLA) increase, if any, in $5,000 increments after
2002 or 100% of the employee’s average compensation for his high 3 years.
2 EGTRRA provides the lesser of $40,000 with COLA increase, if any, in $1,000 increments after 2002 or 100% of employee
compensation. NOTE: 1. The 100% is reduced to 25% for SEPs by the contribution limitations of IRC §402(h)(2)(A), and 2.
SIMPLEs are not subject to IRC §415.
3 Increasing by $1,000 each year in 2004-6; thereafter, COLA increase, if any, in $500 increments.
4 Increasing by $1,000 each year in 2004-6; thereafter, COLA increase, if any, in $500 increments.
5 COLA increase, if any, in $5,000 increments after 2002.
6 $105,000 is 2008 Comp for HCE’s in 2009, $110,000 for 2009 Comp for HCE’s in 2010 and 2011 as well, increased to $115,000 in 2012.
7 Amount used to determine the lengthening of the 5-year distribution period.
8 Amount used for determining the maximum account balance in an ESOP subject to a 5-year
9 Increasing by $1,000 each year in 2004-5; thereafter, COLA increase, if any, in $500 increments.
10 Increasing by $500 each year in 2004-6; thereafter, COLA increase, if any, in $500 increments.

The Elective Deferral Limit is the maximum contribution that can be made on a pre-tax basis to a 401(k) or 403(b) plan (Internal Revenue Code section 402(g)(1)). Some still refer to this as the $7,000 limit (its original setting in 1987).

The 457 Deferral Limit is a similar restriction, applied to certain government plans (457 plans).

The Annual Benefit Limit is the maximum annual benefit that can be paid to a participant (IRC section 415). The limit applied is actually the lessor of the dollar limit above or 100% of the participant's average compensation (generally the high three consecutive years of service). The participant compensation level is also subjected to the Annual Compensation Limit noted above.

The Annual Contribution Limit is the maximum annual contribution amount that can be made to a participant's account (IRC section 415). This limit is actually expressed as the lessor of the dollar limit or 100% of the participant's compensation, applied to the combination of employee contributions, employer contributions and forfeitures allocated to a participant's account. This limit was increased for the first time since its inception last year.

In calculating contribution allocations, a plan cannot consider any employee compensation in excess of the Annual Compensation Limit (401(a)(17)). This limit is also imposed in determining the Annual Benefit Limit (above). In calculating certain nondiscrimination tests (such as the Actual Deferral Percentage), all participant compensation is limited to this amount, for purposes of the calculation.

The Highly Compensated Threshold (section 414(q)(1)(B)) is the minimum compensation level established to determine highly compensated employees for purposes of nondiscrimination testing.

The SIMPLE Contribution Limit is the maximum annual contribution that can be made to a SIMPLE (Savings Incentive Match Plan for Employees) plan. SIMPLE plans are simplified retirement plans for small businesses that allow employees to make elective contributions, while requiring employers to make matching or nonelective contributions.

SEP Coverage Limit is the minimum earnings level for a self-employed individual to qualify for coverage by a Simplified Employee Pension plan (a special individual retirement account to which the employer makes direct tax-deductible contributions.

The SEP Compensation Limit is applied in determining the maximum contributions made to the plan.

Catch up Contributions, SIMPLE "Catch up" deferral: Under the Economic Growth and Tax Relief Act of 2001 (EGTRRA), certain individuals age 50 or over can now make so-called 'catch up' contributions, in addition to the above limits.

EGTRRA also added the Top-heavy plan key employee compensation limit.

NOTICE: This Table is designed to provide an overview of the 2012 COLAS and is not intended to be comprehensive. Executive Benefit Plans, Inc., and its representatives cannot give ERISA, tax or legal advice. This material is provided for informational purposes only and should not be construed as ERISA, tax or legal advice. Interested parties must consult and rely solely upon their own independent advisors regarding their particular situation and the concepts presented here. Although care has been taken in preparing this material and presenting it accurately, we disclaim any express or implied warranty as to the accuracy of any material contained herein and any liability with respect to it.

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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, July 03, 2015 05:21 PM

 

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