IRA Releases Pension Contribution Limitations

The IRS has issued news release IR-2011-103, which announces cost-of-living adjustments to pension plan limitations and other items for 2012.

On October 20, 2011, the IRS issued news release IR-2011-103 announcing cost-of-living adjustments to dollar limitations for pension plans. Items addressed for 2012 include:

Elective deferrals

• The annual elective deferral limit for 401(k) plans, 403(b) plans, 457(b) plans, SAR-SEPs, and the federal government’s Thrift Savings Plan increases from $16,500 in 2011 to $17,000 in 2012
• The annual elective deferral limit for SIMPLE plans remains unchanged at $11,500

Employee “catch-up” contributions for individuals age 50 or older

• The annual limit on additional catch-up contributions to 401(k), 403(b), and Section 457(b) plans remains unchanged at $5,500
• The annual limit on additional catch-up contributions to a SIMPLE plan remains unchanged at $2,500

Other key figures

• The dollar limit on annual additions to a defined contribution plan increases from $49,000 in 2011 to $50,000 in 2012
• The dollar limit on the annual benefit under a defined benefit plan increases from $195,000 in 2011 to $200,000 in 2012
• The annual compensation limit for qualified retirement plan purposes increases from $245,000 in 2011 to $250,000 in 2012
• The annual compensation amount used in the definition of a highly compensated employee increases from $110,000 in 2011 to $115,000 in 2012
• The annual compensation amount used in the definition of a key employee in a top-heavy plan increases from $160,000 in 2011 to $165,000 in 2012
• For purposes of determining a qualifying employee under a simplified employee pension (SEP) plan, the minimum amount of annual compensation remains unchanged at $550