IRS Announces 2012 Cost-of-Living Adjustments for Retirement Plans
The IRS recently announced changes in the dollar limits for qualified retirement plans (and generally for 403(b) and 457(b) plans) for 2012 because the applicable cost-of-living indices have increased.
The following is a list of some important retirement plan limits for 2012:
- The annual limit on elective deferrals to Section 401(k) plans, Section 403(b) annuity contracts and eligible Section 457 plans is $17,000.
- The annual limit for catch-up contributions for individuals age 50 and older to Section 401(k) plans, Section 403(b) annuity contracts and eligible Section 457 plans sponsored by governmental entities is $5,500 (unchanged from 2011).
- The limit on total compensation used in computing contributions and benefits under Section 401(a)(17) is $250,000.
- The dollar limit on aggregate annual additions to defined contribution plans is $50,000 (plus any catch-up contributions).
- The dollar limit on annual benefits in a defined benefit plan under Section 415(b) (before adjustment for age and form) is $200,000.
- An individual earning more than $115,000 in 2012 will generally be a highly compensated employee in 2013.