2010 IRS and Social Security Annual Limitations

Each year the U.S. government adjusts the limits for qualified plans and social security to reflect cost of living adjustments and changes in the law. However, the 2009 limits will remain unchanged for 2010 because the applicable cost of living index has not been increased. Many of these limits are based on the “plan year.” The elective deferral and catch-up limits are always based on the calendar year. Here are the 2010 limits as well as the three prior years for comparative purposes:

Limit 2010 2009 2008 2007
Maximum compensation limit $245,000 $245,000 $230,000 $225,000
Defined contribution plan maximum contribution $49,000 $49,000 $46,000 $45,000
Defined benefit plan maximum benefit $195,000 $195,000 $185,000 $180,000
401(k), 403(b) and 457 plan maximum elective deferrals $16,500 $16,500 $15,500 $15,500
     Catch-up contributions* $5,500 $5,500 $5,000 $5,000
SIMPLE plan maximum elective deferrals $11,500 $11,500 $10,500 $10,500
     Catch-up contributions* $2,500 $2,500 $2,500 $2,500
IRA maximum contributions $5,000 $5,000 $5,000 $4,000
     Catch-up contributions* $1,000 $1,000 $1,000 $1,000
Highly compensated employee threshold $110,000 $110,000 $105,000 $100,000
Key employee (officer) threshold $160,000 $160,000 $150,000 $145,000
Social security taxable wage base $106,800 $106,800 $102,000 $97,500

*Available to participants who are or will be age 50 or older by the end of the calendar year.

This newsletter is intended to provide general information on matters of interest in the area of qualified retirement plans and is distributed with the understanding that the publisher and distributor are not rendering legal, tax or other professional advice. Readers should not act or rely on any information in this newsletter without first seeking the advice of an independent tax advisor such as an attorney or CPA.

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