As Expected, Retirement Contribution Limits Unchanged
The Internal Revenue Service announced on October 15th that various retirement plan limits in effect for 2009 will remain the same for 2010, due to the fact that the cost-of-living index has not increased. These retirement plan limits include the following:
2010 Retirement Plan Limits
Defined Contribution Annual Addition Limit. The 2010 dollar limit on aggregate annual additions (including contributions and forfeiture allocations) under an employer's defined contribution plans remains $49,000.
ESOPs. The dollar amount for determining the maximum account balance in an employee stock ownership plan subject to a five-year distribution period remains $985,000 for 2010, while the amount used to determine the lengthening of the five-year distribution period remains $195,000.
SEPs and SIMPLE Retirement Plans. The minimum compensation for an employee that will require an employer contribution to a simplified employee pension plan remains $550 for 2010, and the 2010 annual limit for salary reduction contributions under a SIMPLE retirement plan (Savings Incentive Match Plan for Employees of Small Employers) remains $11,500.
401k, 403b, and 457 plan Contributions. The annual limit on contributions to Section 401k plans, Section 403b annuity contracts and eligible Section 457 plans remains $16,500 for 2010.
Age 50 and Older Catch-Up Contributions. The annual limit for catch-up contributions for individuals age 50 or over under Section 401k plans, Section 403b annuity contracts and eligible Section 457 plans sponsored by governmental entities remains $5,500 for 2010. For SIMPLE 401k or IRA accounts, the 2010 annual limit remains $2,500.
Other 2010 Benefits-Related Limits
Health Savings Accounts (HSAs). The 2010 annual deduction limit for contributions to an HSA for an individual with self-only coverage under a high deductible health plan (HDHP) will be $3,050. For an individual with family coverage under an HDHP, the limit will be $6,150. An HDHP will need to have an annual deductible that is not less than $1,200 for self-only coverage or $2,400 for family coverage. In addition, the annual out-of-pocket expenses (deductibles, co-payments and other amounts, but not premiums) may not exceed $5,950 for self-only coverage or $11,900 for family coverage. Individuals age 55 and older who are covered by an HDHP can make additional "catch-up" contributions each year until they enroll in Medicare. By statute, the catch-up contribution limit for 2010 and subsequent years will be $1,000.
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