IRS Announces 2011 Pension and Related Limitations

November 8, 2010

On October 28, 2010, the Internal Revenue Service announced that the dollar limitations for pension plans and other items, beginning January 1, 2011, would remain generally unchanged from the limits in effect in 2010. Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. These limitations usually are adjusted annually to reflect cost-of-living increases. Many other limitations applicable to retirement plans are adjusted at the same time and in the same manner as the Section 415 limit. Some of the limits to be applied in 2011 are listed below.

Maximum Annual Compensation taken into account for determining benefits or contributions to a qualified plan -- $245,000

Basic Elective Deferral Limitation for 401(k), 403(b) and 457(b) Plans -- $16,500

Catch-up Contribution Limit for Persons Age 50 and Older in 402k, 403(b) or SARSEP Plans -- $5,500

Limitation on Annual Additions to a Defined Contribution Plan -- $49,000

Note, in no event may annual additions exceed 100% of a participant's compensation.

Limitation on Annual Benefits from a Defined Benefit Plan -- $195,000

Note, in no event may a participant's annual benefit exceed 100% of the participant's average compensation for the participant's high three years.

Highly Compensated Employee Compensation Threshold -- $110,000

Note, Generally an employee is considered "highly compensated" if the employee: a) was a five-percent owner of the employer at any time during the current or preceding year; or (b) received compensation from the employer in the preceding year of more than the applicable dollar limit for that year.

SEP Compensation Threshold -- $550

Social Security Taxable Wage Base for Social Security Tax (6.2%) -- $106,800

For Medicare Tax (1.45%) -- No limit

Health Savings Accounts

Individual Contribution Limit -- $3,050
Family Contribution Limit -- $6,150
Catch-Up Contributions -- $1,000

Overview