If you are planning for your 2012 retirement plan contribution administration, the IRS recently released the 2012 Pension Plan limits. Some key provisions:
- The elective deferral (contribution) limit for employees who participate in 401(k), 403(b) and most 457 plans is increased from $16,500 to $17,000.
- The catch-up contribution limit for those aged 50 and over remains unchanged at $5,500.
- Effective January 1, 2012, the limitation on the annual benefit under a defined benefit plan under section 415(b)(1)(A) is increased to $200,000.
- The limitation for defined contribution plans under Section 415(c)(1)(A) is increased to $50,000.
- The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased to $250,000.
- The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan is increased to $165,000.
- The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) is increased to $115,000.
Most plan service providers will be ready for these changes, but plan sponsors should make themselves aware of these limits. Also, since we are coming up on another plan year, now is a good time to look at your retirement plan documentation and make sure you have all of your required content, notices and statements. Get with your benefits counsel and make sure your plans are all up to speed.