The IRS and the Social Security Administration have announced the cost-of-living adjustments for various benefit plan limits for 2012. Limits affecting retirement plans are shown directly below and the limits for health and certain other fringe benefit plans are shown on the following page.

Retirement Plan Limits

The IRS updated the retirement plan limits effective for the plan year that begins on or after January 1, 2012. Unlike 2011, most limits received a cost-of-living adjustment in 2012. The 2012 limits, as well as the 2011 limits, are as follows:

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Social Security Tax and Wage Base

For calendar year 2012, the Social Security taxable wage base increases to $110,100 (up from $106,800 in 2011). In addition, the employee portion of the Social Security tax increases to 6.2% (up from 4.2%, which is the reduced level that applied only in 2011 pursuant to the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010). Congress and the President have considered extending the lower rate for 2012, but have yet to reach an agreement. The employer portion of the Social Security tax remains unchanged at 6.2%.

Health and Fringe Benefit Plan Limits

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The Service has also released health and fringe benefit plan adjustments effective January 1, 2012. The 2012 limits, as well as the 2011 limits, are as follows: