2012 Retirement Plan Limits Were Recently Announced

Finally, cost of living adjustment (COLA) figures have moved enough to cause retirement plan contribution limits to rise after remaining the same for three years in a row.  On October 20, 2011, the IRS announced the new limits for 2012.  The elective deferral (employee contribution) limit increases from $16,500 to $17,000 for 401(k), 403(b) and most 457 plans, and the “catch-up” contribution limit for participants over age 50 in those plans remains unchanged at $5,500.

The §415(c)(1)(A) limit on total contributions to a defined contribution plan was raised from $49,000 to $50,000.

The §415(b)(1)(A) limitation on the annual benefit under a defined benefit pension plan increased from $195,000 to $200,000. 

The dollar threshold for determining “highly compensated employee” status also increased from $110,000 to $115,000, and the annual compensation limit under §401(a)(17) that governs the amount of compensation that may be considered in a defined contribution plan increased from $245,000 to $250,000.

Additionally, phase-out ranges relating to IRA contributions moved somewhat, and the taxable wage base for social security increased from $106,800 to $110,100.  For a full listing of changes, please see COLA Table.

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