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

To print a copy of the table below, please click here.

 

2008

2009

§401(k) Deferrals / 403(b) Deferrals (§402(g)(1))

$15,500

$16,500
     

Catch-up Contributions for Individuals Age 50 or Older
(§414(v)(2)(B)(i))


$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
(§416(i)(1)(A); §409A(a)(2)(B))


$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))

    
  • One Year for Each:

$185,000

$195,000
  • In Excess of:

$935,000

$985,000

* Current year classification is based on prior year compensation and limit. Nondiscrimination testing for 2009 will generally rely on the 2008 limitation of $105,000 for determining HCEs, and the new limitation of $110,000 will apply for 2010 nondiscrimination testing. Employers may, but are not required to, apply the top-paid 20 percent test in conjunction with this compensation limit.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.