10/21/2009
IRS Announces Plan Limits for 2010
Adjusted Limits
The Internal Revenue Service has announced the 2010 limits that affect the operation of tax-qualified retirement plans, including 401(k) plans, and certain other types of employee benefit plans. Because the cost-of-living index used to determine the annual adjustments decreased over the past twelve months, there will be no adjustment made to the limits. This means that the 2010 limits remain at the same dollar amounts as the 2009 limits. Please see the accompanying table for the limits that are effective January 1, 2010.
Social Security
The Social Security (OASDI) taxable wage base, which governs the amount of pay subject to Social Security tax withholding and affects plans that are "integrated" with Social Security, also is subject to adjustment annually. For 2010, the OASDI taxable wage base remains unchanged at $106,800. The Medicare tax, however, applies to all wages without limit.
2010 ADJUSTED LIMITS |
| Provision | 2010 Limit |
| Maximum 401(k) Contributions | $16,500 |
| Maximum Compensation Limit | $245,000 |
Highly Compensated Employees
Earning (in previous year) more than |
$110,000 |
| Key Employee Limit | $160,000 |
| Annual Contribution Limit for Defined Contribution Plans | $49,000 |
| Annual Benefit Limit for Defined Benefit Plans | $195,000 |
| SIMPLE Plan Limit | $11,500 |
Age 50 and Older Catch-Up Contribution Limit
All plans other than SIMPLE Plans
SIMPLE Plans |
$5,500
$2,500 |
| Annual Contribution Limit for Section 457 Deferred Compensation Plans (government and tax-exempt organizations) | $16,500 |
ESOP:
Maximum account balance subject to five-year distribution period
Each dollar amount of account balance in excess of $915,000 that
adds one year to distribution period |
$985,000
$195,000 |
Simplified Employee Pension Plans (SEPs)
Contributions must be made for employees earning at least |
$500 |
If you have any questions about this Alert, please contact one of the attorneys listed above.