The IRS has spoken! There will be no cost-of-living adjustments to qualified retirements plans in 2010. This announcement comes in an unsteady economy, which has shown a slight decrease in the relevant cost-of-living index from September 30, 2008 to September 30, 2009.
So what does all this mean? Here are some important retirement plan facts for the 2010 plan year:
- During the 2009 retirement plan year, the annual Elective Deferral Contributions limit to Section 401(k), Section 403(b) annuity contracts and eligible Section 457 plans was set to $16,500. In 2010, these limits will remain the same.
- If an individual is over the age of 50, this person is allowed to elect up to $5,500 on an annual basis in Catch-Up Contributions. This means that although the annual elective deferral contribution is limited to $16,500, when an individual is over 50, their limit is raised to $22,000 for that plan year.
- In 2010, the Annual Compensation Limit remains at $245,000 under the 401(a)(17).
- Any one person, during the 2009 plan year, making more than $110,000 will be treated as a Highly Compensated Employee and subject to additional testing/criteria in 2010.
- Also remaining the same in the 2010 plan year is the Defined Contribution Annual Addition Limit (the limit on aggregate annual additions), which is $49,000.
For the full publication on the 2010 limitations from the Internal Revenue Service, please go to www.irs.gov/.
For all other questions or concerns regarding employer plans, contact Xenium at 503-612-1555 or go to www.XeniumHR.com for more information.