St. Petersburg CPA
& Tax Advisor
Since 1989
& Tax Advisor
Since 1989
727-328-2900
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Tax Tips are not a substitute for legal, accounting, tax, investment or other professional advice. Always consult with your trusted accounting advisor before acting upon any Tax Tip.
Tax Tips are not a substitute for legal, accounting, tax, investment or other professional advice. Always consult with your trusted accounting advisor before acting upon any Tax Tip.
IRS Boosts Retirement Plan Limits for 2009 - Higher figures reflect higher inflation rate
The IRS recently issued its annual cost-of-living adjustments for certain retirement plan thresholds. Due to low inflation rates during the middle of this decade, the increases have been relatively modest or nonexistent the last few years. However, the new indexed figures for 2009 reflect a few significant jumps as inflation crept higher last year.
Below is a summary of the key retirement plan limits for the past two years.
Note: The dollar limit for catch-up contributions to a SIMPLE (Savings Investment Match Plan for Employees) plan remains unchanged at $2,500. We will feature contribution limits for traditional and Roth IRAs in an upcoming issue.
| Limit for 2008 | Limit for 2009 | |
| Maximum annual dollar benefit for a defined benefit plan | $185,000 | $195,000 |
| Maximum dollar limit on additions to a defined contribution plan | $46,000 | $49,000 |
| Maximum amount of compensation taken into account for qualified retirement plans | $230,000 | $245,000 |
| Dollar limit for definition of "key employee" in top-heavy retirement plan | $150,000 | $160,000 |
| Dollar limit for definition of "highly compensated employee" in qualified plan | $105,000 | $110,000 |
| Dollar limit for elective deferrals to a 401(k) plan | $15,500 | $16,500 |
| Dollar limit for contributions to a SIMPLE plan | $10,500 | $11,500 |
| Dollar limit for elective deferrals to deferred compensation plans of state and local governments and tax-exempt organizations | $15,500 | $16,500 |
| Dollar limit for catch-up contributions to a SIMPLE plan | $2,500 | $2,500 |
| Dollar limit for catch-up contributions to a 401(k), 403(b), 457 or SEP (Simplified Employee Pension) plan | $5,000 | $5,500 |
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TAX ADVICE DISCLAIMER: In accordance with IRS Circular 230, any tax advice included in this communication, including attachments, is not intended or written to be used, and cannot be used by you or any other person or entity, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, nor may any such advice be used to promote, market or recommend to another party any transaction or matter addressed within this communication. If you would like such advice, please contact us.
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