October 20, 2011
Retirement Plan Limits for 2012 Announced
On October 20, the Internal Revenue Service announced the cost-of-living adjustments that will be applied to the dollar limits in all tax-qualified retirement plans in 2012. The limits apply to calendar year plans, if you have an off-calendar plan year end, contact your plan administrator to see if there are any changes to your plan.
Defined Benefit Plan Limits
The limitation on the annual benefit under a defined benefit plan is increased from $195,000 to $200,000.
Defined Contribution Plan
Individual Contributions
The limitation on contributions made on behalf of an individual to a defined contribution plan is increased from $49,000 to $50,000. Individuals will still be limited to contributions of 100% of compensation or $50,000, whichever is less.
401(k) Deferrals
This dollar limitation on employee deferrals into 401(k) plan is increased from $16,500 to $17,000. This is a calendar year limit regardless of plan year end.
Catch-Up Contributions
For individuals age 50 and over, the catch-up contribution remains unchanged at $5,500. This is a calendar year limit regardless of plan year end.
Annual Compensation Limits
The maximum annual compensation that may be recognized by a plan is increased from $245,000 to $250,000.
Key Employees
The dollar limitation for determining whether an employee is “Key” for officers in a top-heavy plan will increase from $160,000 to $165,000.
Highly Compensated Employees
The dollar limitation on compensation used to determine which employees are considered highly compensated is increased from $110,000 to $115,000. Thus, employees who earn in excess of $110,000 in the plan year beginning in 2011 will be considered highly compensated for the plan year beginning in 2012 and employees who earn in excess of $115,000 in 2012 will be considered highly compensated employees in 2013.
