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IRS Announces Retirement Plan Limitations for 2012 Tax Year – Most Limits Increased

The Internal Revenue Service ("IRS") has announced the cost of living adjustments for the 2012 tax year, which affect various dollar limitations for retirement plans. The IRS increased many of these limitations for the first time since 2009. Some limitations remain unchanged. The following chart highlights many of the noteworthy limitations for the 2012 tax year. 

Plan Limit

2011

2012

Social Security Taxable Wage Base

$106,800

$110,100

Annual Compensation (Code Section 401(a)(17))

$245,000

$250,000

Elective Deferral (Contribution) Limit for Employees who Participate in 401(k), 403(b) and most 457(b) Plans (Code Sections 402(g), 457(e)(15))

$16,500

$17,000

Age 50 Catch-Up Contribution Limit (Code Section 414(v)(2)(B)(i))

$5,500

$5,500

Highly Compensated Employee Threshold (Code Section 414(q)(1)(B))

$110,000

$115,000

Defined Contribution Plan Limitation on Annual Additions (Code Section 415(c)(1)(A))

$49,000

$50,000

Defined Benefit Plan Limitation on Annual Benefit (Code Section 415(b)(1)(A))

$195,000

$200,000

ESOP Distribution Period Rules—Payouts in Excess of Five Years (Code Section 409(o)(1)(C))

$985,000

$195,000

$1,015,000

$200,000

Key Employee Compensation Threshold for Officers (Code Section (416(i)(1)(A)(i))

$160,000

$165,000

Plan sponsors should review employee communications and update such communications as appropriate based on the 2012 cost of living adjustments. Other cost of living adjustments can be found on the IRS website: http://www.irs.gov/retirement/article/0,,id=96461,00.html.

©2019 von Briesen & Roper, s.c

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About this Author

Catherine Conway, Von Briesen Roper Law Firm, Labor and Employment, Health Care and Tax Law Attorney

Catherine Conway is a Shareholder in our Milwaukee office. Cathy has worked extensively with clients on designing and administering qualified and nonqualified retirement and deferred compensation plans, insured and self-insured health plans, cafeteria plans, compliance with federal and state health care continuation requirements (COBRA) and other employee benefit matters. In this capacity, she advises clients regarding employee benefit issues in mergers and acquisitions and day-to-day compliance with requirements under ERISA, the Internal Revenue Code and provisions of...

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