IRS Releases Pension Contribution Limitations

05 Jan IRS Releases Pension Contribution Limitations

IRS Announces Pension Plan Limitations for 2012

The IRS has issued news release IR-2011-103, which announces cost-of-living adjustments to pension plan limitations and other items for 2012.

On October 20, 2011, the IRS issued news release IR-2011-103 announcing cost-of-living adjustments to dollar limitations for pension plans. Items addressed for 2012 include:

Elective deferrals

  • The annual elective deferral limit for 401(k) plans, 403(b) plans, 457(b) plans, SAR-SEPs, and the federal government’s Thrift Savings Plan increases from $16,500 in 2011 to $17,000 in 2012
  • The annual elective deferral limit for SIMPLE plans remains unchanged at $11,500

Employee “catch-up” contributions for individuals age 50 or older

  • The annual limit on additional catch-up contributions to 401(k), 403(b), and Section 457(b) plans remains unchanged at $5,500
  • The annual limit on additional catch-up contributions to a SIMPLE plan remains unchanged at $2,500

Other key figures

  • The dollar limit on annual additions to a defined contribution plan increases from $49,000 in 2011 to $50,000 in 2012
  • The dollar limit on the annual benefit under a defined benefit plan increases from $195,000 in 2011 to $200,000 in 2012
  • The annual compensation limit for qualified retirement plan purposes increases from $245,000 in 2011 to $250,000 in 2012
  • The annual compensation amount used in the definition of a highly compensated employee increases from $110,000 in 2011 to $115,000 in 2012
  • The annual compensation amount used in the definition of a key employee in a top-heavy plan increases from $160,000 in 2011 to $165,000 in 2012
  • For purposes of determining a qualifying employee under a simplified employee pension (SEP) plan, the minimum amount of annual compensation remains unchanged at $550

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

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