Sunday, November 20, 2011

2012 Cost-of-Living Adjustments for Pension Plan and Other Limits


2012 Cost-of-Living Adjustments for Pension Plan and Other Limits

1.   2012 COLA Adjustments for Pension Plan Limits.  The IRS announced in IR-2011-103 http://www.irs.gov/newsroom/article/0,,id=248482,00.html the pension plan limits for 2012 adjusted by IRC § 415(d).  

Pension Plan Limits Adjusted by IRC § 415(d)

2012 Amounts
2011 Amounts
(& 2010 & 2009)
Annual benefits limit for defined benefit plans – Code § 415 (b)
$200,000
$195,000
Annual contributions limit for defined contribution plans – Code § 415(c)
$50,000
$49,000
Elective deferral max for 401(k), 403(b) & 457(b) plans – Code § 402(g)
$17,000
$16,500
Age 50 catch-up contributions – Code § 414(v)
$5,500
$5,500
Age 50 catch-up for SIMPLE Plans (unchanged)
$2,500
$2,500
Elective deferral limit for SIMPLE plans – Code § 408(p)
$11,500
$11,500
Highly-compensated employee threshold – Code § 414(q)
$115,000
$110,000
Annual compensation limit – Code § 401(a)(17)
$250,000
$245,000
Key-employee threshold for top heavy plan - § 416(i)
$165,000
$160,000
ESOP account balance for 5-year / 1-year distribution rule under IRC § 409(o)(1)(C)(ii)
$1,015,000 &
$200,000
$985,000 &
$195,000

The following pension-related amounts adjusted under IRC § 1(f)(3) have been increased:


Pension-Related Amounts Adjusted under § 1(f)(3)

2012 Amount

2011 Amount
Phase-out for deductions for IRA for married couples filing jointly, in which the spouse who makes the IRA contribution is an active participant in an employer-sponsored retirement plan
$92,000 to
$112,000
$90,000  to
$110,000
Adjusted gross income (AGI) phase-out range for married joint filers taxpayers making contributions to a Roth IRA
$173,000 and
$183,000
$169,000 to
$179,000
AGI limit for retirement savings contributions credit for married couples filing jointly
$57,500
$56,500
IRC § 430(c)(7)(D)(i)(II) amount for determining excess employee compensation for defined benefit plans where election has been made
$1,039,000
$1,014,000
2.   2012 Health Savings Account (HSA) Contribution Limits.  As announced in June in Rev. Proc. 2011-32, health savings account (HSA) contribution limits for 2012 will be a maximum single contribution limit of $3,100 and a maximum family contribution limit of $6,250, (up from $3,050 and $6,150 in 2011).

3.   PBGC Maximum Insurance Benefit and PBGC Premiums.  The PBGC maximum insurance benefit for 2011 is $54,000 per year ($4,500 per month).  The PBGC has not yet announced 2012 maximum insurance benefit.
The PBGC flat-rate premium for 2012 is unchanged at $35 for a single-employer plan and $9 for multiemployer plans.  PBGC What’s New for Practitioners – Oct. 25, 2011.

4.   Social Security Taxable Wage Base.  The Social Security Administration announced in a press release http://www.ssa.gov/pressoffice/pr/2012cola-pr.html and fact sheet http://www.ssa.gov/pressoffice/factsheets/colafacts2012.htm , issued October 19, 2011, that there will be a cost-of-living adjustment for Social Security benefits in 2012 of  3.6 percent.  The social security taxable wage base (subject to the 6.2% social security tax) is increased to $110,100 for 2012 (up from $106,800 in 2011).  Also, the annual earnings test is $14,640 for 2012 (up from $14,160 in 2011) prior to normal retirement and $38,880 for 2012 (up from $37,680 in 2011) at normal retirement age.

5.   Transit Passes and Van Pooling Goes Down to $125.  The cost-of-living adjustment for qualified transportation limits under Code § 132(f) had been adjusted in Rev. Proc. 2011-52, for 2012 at $240 for qualified parking benefits and $125 for transit passes and van pooling.  The American Recovery and Reinvestment Act of 2009 and the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 provided for temporary parity between public transit/van-pooling and parking, so that the monthly limitation for transit passes and van pooling was the same as for qualified parking benefits - $230 – through December 31, 2011.  But this has thus far not been extended.


       

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