403(b) Outlook: IRS Announces Pension Plan Limitations For 2009

December 24, 2008

403b Outlook Archive 403(b) Outlook Archive

In a recent publication, the IRS announced pension and other limitations for 2009. Because rising inflation has triggered cost-of-living-index adjustments, many pension plan limitations will change for 2009, including the following:

  • Section 415 annual dollar limit on combined employer and employee contributions to defined contribution plans rises from $46,000 to $49,000;
  • Section 415 limit on maximum annual benefits from defined benefit plans rises from $185,000 to $195,000;
  • Section 401(a)(17) limit on maximum amount of compensation that can be taken into account for calculating retirement plan contributions or nondiscrimination testing rises from $230,000 to $245,000 (doesn't apply to certain church plans or generally to employees who became participants in governmental plans before 1996);
  • Section 401(a)(17) limit on maximum amount of compensation that can be taken into account for calculating retirement plan contributions for certain grandfathered participants in governmental plans rises from $345,000 to $360,000;
  • Compensation floor for determining who is a highly compensated employee for nondiscrimination testing increases from $105,000 to $110,000 (Note that the 2008 limit of $105,000 is used to determine who is highly compensated in 2009 plan years);
  • Section 402(g) limit on salary reduction and Roth contributions to 403(b) or 401(k) plans increases from $15,500 to $16,500;
  • Limit on salary reduction contributions to 457(b) plans increases from $15,500 to $16,500.
  • Limit on catch-up contributions that participants in 403(b), 401(k) or governmental 457(b) plans aged 50 or over can make increases from $5,000 to $5,500.

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