On October 20, 2011, the Internal Revenue Service announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for Tax Year 2012. In general, many of the pension plan limitations will change for 2012 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged.
• The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan is increased from $16,500 to $17,000.
• The catch-up contribution limit for those aged 50 and over remains unchanged at $5,500.
Below are the plan limits for 2012 –
| Plan Limits for Plan Year |
2012 |
2011 |
| 401(k), 403(b), 457 Elective Deferral Limit |
$17,000 |
$16,500 |
| Catch-Up Contribution Limit |
$5,500 |
$5,500 |
| Annual Compensation Limit |
$250,000 |
$245,000 |
| Defined Contribution Limit |
>$50,000 |
$49,000 |
| Defined Benefit Limit |
$200,000 |
$195,000 |
| Key Employee |
$165,000 |
$160,000 |
| Definition of Highly Compensated Employee |
$115,000 |
$110,000 |
| Social Security Wage Base |
$110,100 |
$106,800 |
This information is provided by our business partner, Peter A. Klinkmueller, AIF® of Commonwealth Financial Network For more information, please contact Ken Bettenhauser at HR Knowledge at ken@hrknowledge.com or 508-339-1300
HR Knowledge is a provider of integrated HR, payroll and benefits services. Our offices are located in the Boston, MA metro area and we service companies throughout the United States.