IRS Announces Plan Limits for 2010

Adjusted Limits

The Internal Revenue Service has announced the 2010 limits that affect the operation of tax-qualified retirement plans, including 401(k) plans, and certain other types of employee benefit plans. Because the cost-of-living index used to determine the annual adjustments decreased over the past twelve months, there will be no adjustment made to the limits. This means that the 2010 limits remain at the same dollar amounts as the 2009 limits. Please see the accompanying table for the limits that are effective January 1, 2010.

Social Security

The Social Security (OASDI) taxable wage base, which governs the amount of pay subject to Social Security tax withholding and affects plans that are “integrated” with Social Security, also is subject to adjustment annually. For 2010, the OASDI taxable wage base remains unchanged at $106,800. The Medicare tax, however, applies to all wages without limit.

 2010 ADJUSTED LIMITS

Provisions
2010 Limits
 

 

 

 

 Maximum 401(k) Contributions: $16,500

 

 

 

 

 Maximum Compensation Limit: $245,000

 

 

 

 

 Highly Compensated Employees
 
      Earning (in previous year) more than: $110,000

 

 

 

 

 Key Employee Limit: $160,000

 

 

 

 

 Annual Contribution Limit for Defined Contribution Plans: $49,000

 

 

 

 

 Annual Benefit Limit for Defined Benefit Plans: $195,000

 

 

 

 

 SIMPLE Plan Limit: $11,500

 

 

 

 

 Age 50 and Older Catch-Up Contribution Limit
 
All plans other than SIMPLE Plans  $5,500
SIMPLE Plans  $2,500

 

 

 

 

 Annual Contribution Limit for Section 457 Deferred Compensation Plans (government and tax-exempt organizations): $16,500

ESOP:
 
Maximum account balance subject to five-year distribution period: $985,000

Each dollar amount of account balance in excess of $915,000 that
adds one year to distribution period: $195,000Simplified Employee Pension Plans (SEPs)
 
Contributions must be made for employees earning at least: $500 

Source: Cooley Godward Kronish, LLP