The Internal Revenue Service (IRS) has announced the cost-of-living adjustments applicable to dollar limitations for pension plans and other amounts for 2008. Several of the limits have changed.
Included in this special edition is a table showing the 2008 and 2007 amounts so that users can easily determine those values that have changed.
Changes affecting 401(k) elective deferrals include: annual compensation limit increases from $225,000 to $230,000; maximum annual addition to defined contribution plans, generally, increases from $45,000 to $46,000.
As in previous years, the IRS advises that 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 plan.
2008 LIMITATIONS FOR EMPLOYEE BENEFIT PLANS
|
|
2007 |
2008 |
|
§401(k) Deferrals/403(b) Deferrals (§402(g)(1)) |
$15,500 |
$ 15,500 |
|
Catch-Up Contributions for Individuals Age 50 or Older (§414(v)(2)(b)(i)) |
$5,000 |
$5,000 |
|
Compensation Limit (§401(a)(17)) |
$225,000 |
$230,000 |
|
Defined Benefit Limit (§415(b)(1)(A)) |
$180,000 |
$185,000 |
|
Defined Contribution Limit (§415(c)(1)(A)) |
$45,000 |
$46,000 |
|
|
| |
|
Nondiscrimination Testing Threshold (414(q)(1)(B)) |
|
|
|
Pay Exceeding * |
$100,000 * |
$105,000 * |
|
Key Employee Officer Compensation Threshold |
$145,000 |
$150,000 |
|
Social Security Limits: |
|
|
|
Old Age, Survivors and Disability Insurance (OASDI) Tax Rate |
6.2 percent |
6.2 percent |
|
OASDI Taxable Wage Base |
$97,500 |
$102,000 |
|
Medicare Tax Rate |
1.45 percent |
1.45 percent |
|
Medicare Taxable Wage Base |
All Wages |
All Wages |
|
Self-employed Combined Rate |
15.3 percent |
15.3 percent |
|
Other Indexed Limits |
|
|
|
§457 Deferrals (§457(e)(15)) |
$15,500 |
$15,500 |
|
Simplified Employee Pension Plan (SEP) Maximum Pay (§408(k)(3)(C)) |
$225,000 |
$230,000 |
|
SEP Eligibility Pay Threshold (§408(k)(2)(C)) |
$500 |
$500 |
|
SIMPLE Salary Reduction Maximum (§408(p)(2)(E)) |
$10,500 |
$ 10,500 |
|
Exclusion for Transportation in a Commuter Highway Vehicle and any Transit Pass Per Month (§132(f)(2)(A)) |
$110 |
$115 |
|
Exclusion for Qualified Parking Per Month (§132(f)(2)(B)) |
$215 |
$220 |
|
Employee Stock Ownership Plan (ESOP) Payouts in Excess of Five Years (§409(o)(1)(C)) |
|
|
|
$180,000 |
$185,000 |
|
$915,000 |
$935,000 |
* Current year classification is based upon prior year compensation and limit. For 2008, nondiscrimination testing generally will rely on the 2007 limitation of $100,000 for determining HCEs, and the new limitation of $105,000 will apply for 2009 nondiscrimination testing. Employers may, but are not required to, apply the top-paid 20 percent test in conjunction with this compensation limit.
If you have any questions about or would like to discuss these topics further, please contact your Foley attorney or any of the following individuals:
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Katherine L. Aizawa Christopher S. Berry Lloyd J. Dickinson Gregg H. Dooge Carl D. Fortner Robert E. Goldstein Samuel F. Hoffman Sarah B. Krause |
Harvey A. Kurtz Belinda S. Morgan Isaac J. Morris Greg W. Renz Leigh C. Riley Timothy L. Voigtman Michael H. Woolever |
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