On October 20, 2011, the Internal Revenue Service announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for Tax Year 2012. In general, many of the pension plan limitations will change for 2012 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged.
• The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $16,500 to $17,000.
• The catch-up contribution limit for those aged 50 and over remains unchanged at $5,500.
Below are the plan limits for 2012 –
Plan Limits for Plan Year | 2012 | 2011 |
401(k), 403(b), 457 Elective Deferral Limit | $17,000 | $16,500 |
Catch-Up Contribution Limit | $5,500 | $5,500 |
Annual Compensation Limit | $250,000 | $245,000 |
Defined Contribution Limit | >$50,000 | $49,000 |
Defined Benefit Limit | $200,000 | $195,000 |
Key Employee | $165,000 | $160,000 |
Definition of Highly Compensated Employee | $115,000 | $110,000 |
Social Security Wage Base | $110,100 | $106,800 |
This information is provided by our business partner, Peter A. Klinkmueller, AIF® of Commonwealth Financial Network For more information, please contact Ken Bettenhauser at HR Knowledge at ken@hrknowledge.com or 508-339-1300
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