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
|
|
2008 |
2009 |
|
§401(k) Deferrals / 403(b) Deferrals (§402(g)(1)) |
$15,500 |
$16,500 |
|
Catch-up Contributions for Individuals Age 50 or Older |
$5,000 |
$5,500 |
|
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 |
$150,000 |
$160,000 |
|
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)) |
$115 |
$120 |
|
Exclusion for Qualified Parking per Month (§132(f)(2)(B)) |
$220 |
$230 |
|
Employee Stock Ownership Plan (ESOP) Payouts in Excess of Five Years (§409(o)(1)(C)) |
|
|
|
$185,000 |
$195,000 |
|
$935,000 |
$985,000 |
Legal News Alert is part of our ongoing commitment to providing legal insight to our employee benefits clients and colleagues. If you have any questions about or would like to discuss this topic further, please contact your Foley attorney or any of the following individuals:
|
Katherine L. Aizawa Christopher S. Berry Lloyd J. Dickinson Gregg H. Dooge Carl D. Fortner Robert E. Goldstein Samuel F. Hoffman Sarah B. Krause |
Harvey A. Kurtz Belinda S. Morgan Isaac J. Morris Greg W. Renz Leigh C. Riley Timothy L. Voigtman Michael H. Woolever |
Internal Revenue Service regulations generally require that, for purposes of avoiding United States federal tax penalties, a taxpayer may only rely on formal written opinions meeting specific requirements described in those regulations. This newsletter does not meet those requirements. To the extent this newsletter contains written information relating to United States federal tax issues, the written information is not intended or written to be used, and a taxpayer cannot use it, for the purpose of avoiding United States federal tax penalties, and it was not written to support the promotion or marketing of any transaction or matter discussed in the newsletter.