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2010 Dollar Limits on Benefits and Compensation for Qualified Retirement Plans, SEPs and SIMPLEs - December 1, 2010

By Barry R. Milberg

The IRS announced the 2010 dollar limits on benefits and compensation for qualified retirement plans, SEPs and SIMPLEs in IRS News Release IR-2009-94

In the recent past, increases in the contribution limits for 401(k), 403(b), 457(b), SIMPLE, and the “Catch-up” contribution limits increased annually based on cost-of-living adjustments.  Any applicable increase is subject to preset minimum increments (except for the Social Security Wage Base) based on the amounts and measuring periods indicated in the chart below.  However...

The limits remain unchanged for 2010.  Here's why...

The subsequent year's limits (in this case year 2010's limits) adjust annually based on a comparison of the cost-of-living index as of the quarter ending September 30 of the current year (2009) as compared to the prior year's index as of the quarter ending September 30 (2008).  Since the 2009 index was lower than 2008's, no increases apply for 2010. 

Access 2006-2010 limits chart via link provided below.

2010 IRS Limits for Qualified Retirement Plans, SEPs and SIMPLEs

 

2010 Limit 

Minimum Increment

for COLA Increase

Applicable

Measuring Period

Defined Contribution

   Annual Additions Limit

 $49,000

$1,000 

Limitation Years

ending in 2010

Defined Benefit

   Annual Benefit Limit

$195,000

$5,000 

Limitation Years

ending in 2010

Social Security

   Taxable Wage Base

$106,800 

 N/A  

For Permitted Disparity,

Plan Years beginning in '10

Qualified Retirement Plan

   Compensation Limit

$245,000 

$5,000 

Plan Years beginning in '10

401(k)/403(b)/457(b)

   Calendar Year Deferral Limit

$16,500 

$500

Calendar Year

SIMPLE Plan

   Calendar Year Deferral Limit

$11,500 

$500

Calendar Year

"Catch-up" Limit (age 50+)

   401(k)/403(b)/457

   SIMPLE

$5,500 

$2,500 

$500

Calendar Year

SEP Contribution Eligibility

   Min. Compensation Required

$550 

$50 

Limitation Years

ending in 2010

HCE Definition

   Compensation Test

$110,000 

$5,000 

Look Back Years

beginning in 2009

Top heavy Key EE Definition

 

 

 

   Top Ten Owner Test

N/A

N/A

 

   Officer Test

$160,000 

$5,000

Plan Year that includes the 2010

 Top heavy determination date

   1% Owner Test

$150,000 

N/A 

2006-2010 IRS Limits on Benefits and Compensation for Qualified Retirement Plans, SEPs and SIMPLEs Chart

IRS News Release IR-2009-94

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© 2009 ERISA Expertise LLC  All Rights Reserved

The information provided is intended as a general resource, not as investment or retirement planning, or legal plan compliance advice or counsel.  If you consider any actions discussed in this update, we suggest that you consult a qualified planning, tax or ERISA professionalERISA Expertise LLC and Barry R. Milberg do not warrant and are not responsible for any errors and omissions from this update.  Any tax advice included in this written or electronic communication is not intended or written to be used, and it cannot be used, by the taxpayer for the purpose of avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency.

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