|
IR-2009-94, Oct. 15, 2009
WASHINGTON --The Internal Revenue Service today announced cost‑of‑living
adjustments applicable to dollar limitations for pension plans and other items
for Tax Year 2010.
Section 415 of the Internal Revenue Code provides for dollar limitations on
benefits and contributions under qualified retirement plans. Section 415(d)
requires that the Commissioner annually adjust these limits for cost‑of‑living
increases. Other limitations applicable to deferred compensation plans are also
affected by these adjustments under Section 415. Under Section 415(d), the
adjustments are to be made pursuant to adjustment procedures which are similar
to those used to adjust benefit amounts under Section 215(i)(2)(A) of the Social
Security Act.
The limitations that are adjusted by reference to Section 415(d) will remain
unchanged for 2010. This is because the cost-of-living index for the quarter
ended September 30, 2009, is less than the cost-of-living index for the quarter
ended September 30, 2008, and, following the procedures under the Social
Security Act for adjusting benefit amounts, any decline in the applicable index
cannot result in a reduced limitation. For example, the limitation under
Section 402(g)(1) on the exclusion for elective deferrals described in Section
402(g)(3) will be $16,500 for 2010, which is the same amount as for 2009. This
limitation affects elective deferrals to Section 401(k) plans and to the Federal
Government’s Thrift Savings Plan, among other plans.
Effective January 1, 2010, the limitation on the annual benefit under a
defined benefit plan under Section 415(b)(1)(A) remains unchanged at $195,000.
For participants who separated from service before January 1, 2010, the
limitation for defined benefit plans under Section 415(b)(1)(B) is computed by
multiplying the participant's compensation limitation, as adjusted through 2009,
by 1.0000.
The limitation for defined contribution plans under Section 415(c)(1)(A)
remains unchanged for 2010 at $49,000.
The Code provides that various other dollar amounts are to be adjusted at the
same time and in the same manner as the dollar limitation of Section
415(b)(1)(A). After taking into account the applicable rounding rules, the
amounts for 2010 are as follows:
The limitation under Section 402(g)(1) on the exclusion for elective
deferrals described in Section 402(g)(3) remains unchanged at $16,500.
The annual compensation limit under Sections 401(a)(17), 404(l),
408(k)(3)(C), and 408(k)(6)(D)(ii) remains unchanged at $245,000.
The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition
of key employee in a top-heavy plan remains unchanged at $160,000.
The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum
account balance in an employee stock ownership plan subject to a 5‑year
distribution period remains unchanged at $985,000, while the dollar amount used
to determine the lengthening of the 5‑year distribution period remains unchanged
at $195,000.
The limitation used in the definition of highly compensated employee under
Section 414(q)(1)(B) remains unchanged at $110,000.
The dollar limitation under Section 414(v)(2)(B)(i) for catch-up
contributions to an applicable employer plan other than a plan described in
Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains
unchanged at $5,500. The dollar limitation under Section 414(v)(2)(B)(ii) for
catch-up contributions to an applicable employer plan described in Section
401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged
at $2,500.
The annual compensation limitation under Section 401(a)(17) for eligible
participants in certain governmental plans that, under the plan as in effect on
July 1, 1993, allowed cost‑of‑living adjustments to the compensation limitation
under the plan under Section 401(a)(17) to be taken into account, remains
unchanged at $360,000.
The compensation amount under Section 408(k)(2)(C) regarding simplified
employee pensions (SEPs) remains unchanged at $550.
The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement
accounts remains unchanged at $11,500.
The limitation on deferrals under Section 457(e)(15) concerning deferred
compensation plans of state and local governments and tax-exempt organizations
remains unchanged at $16,500.
The compensation amounts under Section 1.61‑21(f)(5)(i) of the Income Tax
Regulations concerning the definition of “control employee” for fringe benefit
valuation purposes remains unchanged at $95,000. The compensation amount under
Section 1.61‑21(f)(5)(iii) remains unchanged at $195,000.
The Code also provides that several pension-related amounts are to be
adjusted using the cost-of-living adjustment under Section 1(f)(3). After
taking the applicable rounding rules into account, the amounts for 2010 are as
follows:
The adjusted gross income limitation under Section 25B(b)(1)(A) for
determining the retirement savings contribution credit for married taxpayers
filing a joint return is increased from $33,000 to $33,500; the limitation under
Section 25B(b)(1)(B) remains unchanged at $36,000; and the limitation under
Sections 25B(b)(1)(C) and 25B(b)(1)(D), remains unchanged at $55,500.
The adjusted gross income limitation under Section 25B(b)(1)(A) for
determining the retirement savings contribution credit for taxpayers filing as
head of household is increased from $24,750 to $25,125; the limitation under
Section 25B(b)(1)(B) remains unchanged at $27,000; and the limitation under
Sections 25B(b)(1)(C) and 25B(b)(1)(D), remains unchanged at $41,625.
The adjusted gross income limitation under Section 25B(b)(1)(A) for
determining the retirement savings contribution credit for all other taxpayers
is increased from $16,500 to $16,750; the limitation under Section 25B(b)(1)(B)
remains unchanged at $18,000; and the limitation under Sections 25B(b)(1)(C) and
25B(b)(1)(D), remains unchanged at $27,750.
The deductible amount under § 219(b)(5)(A) for an individual making qualified
retirement contributions remains unchanged at $5,000.
The applicable dollar amount under Section 219(g)(3)(B)(i) for determining
the deductible amount of an IRA contribution for taxpayers who are active
participants filing a joint return or as a qualifying widow(er) remains
unchanged at $89,000. The applicable dollar amount under Section
219(g)(3)(B)(ii) for all other taxpayers (other than married taxpayers filing
separate returns) is increased from $55,000 to $56,000. The applicable dollar
amount under Section 219(g)(7)(A) for a taxpayer who is not an active
participant but whose spouse is an active participant is increased from $166,000
to $167,000.
The adjusted gross income limitation under Section 408A(c)(3)(C)(ii)(I) for
determining the maximum Roth IRA contribution for married taxpayers filing a
joint return or for taxpayers filing as a qualifying widow(er) is increased from
$166,000 to $167,000. The adjusted gross income limitation under Section
408A(c)(3)(C)(ii)(II) for all other taxpayers (other than married taxpayers
filing separate returns) remains unchanged at $105,000.
Subscribe to
IRS Newswire |
