2009 Dollar Limits on Benefits and Compensation for Qualified Retirement Plans, SEPs and SIMPLEs - October 20, 2008
On October 16, 2008, in IRS News Release IR-2008-118, the IRS announced the 2009 dollar limits on benefits and compensation for qualified retirement plans, SEPs and SIMPLEs. Increases in the contribution limits for 401(k), 403(b), 457(b), SIMPLE, and the “Catch-up” contribution limits are indexed annually based on cost-of-living adjustments subject to preset minimum increments (except for the Social Security Wage Base). Each limit applies to different measuring periods as indicated.
Most notable are the defined contribution maximum annual additions limit increase from $46,000 to $49,000, the maximum calendar year 401(k) deferral limit from $15,500 to $16,500, the maximum calendar year 401(k) "catch-up" deferral limit from $5,000 to $5,500, the maximum calendar year SIMPLE deferral limit from $10,500 to $11,500, the defined benefit maximum annual benefit limit increase from $185,000 to $195,000, and the maximum compensation limit increase from $230,000 to $245,000 in 2009 based on cost-of-living adjustments in preset increments; and the Social Security Wage Base increase from $102,000 to $106,800. The SIMPLE catch-up limit remains the same as the 2008 limit.
Commentary For the very small employer (1-20 eligible employees), the increases in the compensation, annual addition/benefit, 401(k) and "catch-up" limits translate into increased contributions/benefits for the small business owner and lower cost to fund benefits for eligible employees. Look for a case study illustrating this in the coming weeks.
Increase compared to 2008 limit shown in bold. Access 2005-2009 limits chart via link provided below.
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