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IRS: 2009 Retirement Plan Contribution Limits 
 

10/16/2008  By Stephen Miller 
 
 

On Oct. 16, 2008, the Internal Revenue Service (IRS) announced its tax year 2009 cost-of-living adjustments for dollar limits on qualified retirement plan benefits and contributions, effective Jan. 1, 2009.

Many retirement plan limits will change for 2009 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. For 401(k) plans in tax year 2009:

    The limit on the exclusion for elective deferrals is increased from $15,500 to $16,500.

      The overall limit for defined contribution plan deferrals from all sources (employer and employee combined) is increased from $46,000 to $49,000.

      The additional catch-up contribution for those age 50 and older is increased from $5,000 to $5,500.

      The annual compensation limit is increased from $230,000 to $245,000.

      The dollar limit concerning the definition of key employee in a top-heavy plan is increased from $150,000 to $160,000

      The limit used in the definition of highly compensated employee is increased from $105,000 to $110,000.

401(k) Plan Limits

2008

2009

Maximum elective deferral

$15,500

$16,500

Defined contribution maximum deferral (employer/employee combined)

$46,000

$49,000

Maximum catch-up contribution for those age 50 and older

$5,000

$5,500

Defined Benefit Plans

The annual benefit limit for defined benefit plans is increased from $185,000 to $195,000. For participants who separated from service before Jan. 1, 2009, the limit for defined benefit plans is computed by multiplying the participant's compensation limitation, as adjusted through 2008, by 1.0530.

Other Plan Limit Changes

      The dollar amount for determining the maximum account balance in employee stock ownership plans (ESOPs) subject to a five-year distribution period is increased from $935,000 to $985,000, while the dollar amount used to determine the lengthening of the five-year distribution period is increased from $185,000 to $195,000.

      The compensation amount for simplified employee pensions (SEPs) is increased from $500 to $550.

      The limit for SIMPLE retirement accounts is increased from $10,500 to $11,500.

According to the IRS, administrators of defined benefit or defined contribution plans that have received favorable determination letters should not request new determination letters solely because of yearly amendments to adjust maximum limitations in the plans.

Stephen Miller is an online editor/manager for SHRM.


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