The IRS has announced the cost-of-living adjustments applicable to dollar limitations for pension plans and other amounts for 2010.
This special edition of Foley's Legal News Alert contains a table showing the 2010 and 2009 amounts. All amounts shown on the table are unchanged for 2010.
This Legal News Alert should be forwarded to persons in charge of determining which employees of publicly traded companies are "specified employees" for IRS Section 409A purposes.
2010 Limitations for Employee Benefit Plans
|
2009 |
2010 |
|
|
§401(k) Deferrals / 403(b) Deferrals (§402(g)(1)) |
$16,500 |
$16,500 |
|
Catch-Up Contributions for Individuals Age 50 or Older (§414(v)(2)(B)(i)) |
$5,500 |
$5,500 |
|
Compensation Limit (§401(a)(17)) |
$245,000 |
$245,000 |
|
Defined Benefit Limit (§415(b)(1)(A)) |
$195,000 |
$195,000 |
|
Defined Contribution Limit |
$49,000 |
$49,000 |
|
Highly Compensated Employees (HCEs) Nondiscrimination Testing Threshold (414(q)(1)(B)) Pay Exceeding * |
$110,000 * |
$110,000 * |
|
Key Employee Officer Compensation Threshold
(§416(i)(1)(A); |
$160,000 |
$160,000 |
|
Social Security Limits: |
||
|
Old Age, Survivors, and Disability Insurance (OASDI) Tax Rate |
6.2 percent |
6.2 percent |
|
OASDI Taxable Wage Base |
$106,800 |
$106,800 |
|
Medicare Tax Rate |
1.45 percent |
1.45 percent |
|
Medicare Taxable Wage Base |
All Wages |
All Wages |
|
Self-Employed OASDI Tax Rate |
12.4 percent |
12.4 percent |
|
Self-Employed Medicare Tax Rate |
2.9 percent |
2.9 percent |
|
Other Indexed Limits: |
||
|
§457 Deferrals (§457(e)(15)) |
$16,500 |
$16,500 |
|
Simplified Employee Pension (SEP) Maximum Pay (§408(k)(3)(C)) |
$245,000 |
$245,000 |
|
SEP Eligibility Pay Threshold |
$550 |
$550 |
|
Savings Incentive Match |
$11,500 |
$11,500 |
|
Exclusion for Transportation in a Commuter Highway Vehicle and
Any Transit Pass Per Month |
$230 ** |
$230 |
|
Exclusion for Qualified Parking Per Month (§132(f)(2)(B)) |
$230 |
$230 |
|
Employee Stock Ownership Plans (ESOP) Payouts in Excess of Five Years (§409(o)(1)(C)) |
||
|
$195,000 |
$195,000 |
|
$985,000 |
$985,000 |
* Current year classification is based on prior year compensation and limit. 2010 nondiscrimination testing will generally rely on the 2009 limitation of $110,000 for determining HCEs and the 2010 limitation of $110,000 will apply for 2011 nondiscrimination testing. Employers may, but are not required to, apply the top-paid 20 percent test in conjunction with this compensation limit.
** Months beginning after February 17, 2009.
Internal Revenue Service regulations generally require that, for purposes of avoiding United States federal tax penalties, a taxpayer may only rely on formal written opinions meeting specific requirements described in those regulations. This newsletter does not meet those requirements. To the extent this newsletter contains written information relating to United States federal tax issues, the written information is not intended or written to be used, and a taxpayer cannot use it, for the purpose of avoiding United States federal tax penalties, and it was not written to support the promotion or marketing of any transaction or matter discussed in the newsletter.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.