Pension Plan Limits 2008
The federal government has recently announced cost of living adjustments applicable to dollar limitations for pension plans and other items for 2008. The increase in the cost-of-living index met the statutory thresholds which triggered the increase in the indexed amounts. However, some amounts will remain unchanged for 2008. For instance, the amount of employee elective deferrals under a 401k plan remains at $15,500 and catch-up contributions for those aged 50 and over remains at $5,000 for 2008.
Some of these pension plan adjustments from 2007-2008 include:
- an increase in the amount that can be contributed to a defined contribution plan from $45,000 in 2007 to $46,000 in 2008,
- an increase in the annual benefit limitation under a defined benefit plan from $180,000 to $185,000,
- an increase in the annual compensation limit used in determining the maximum pension contribution from $225,000 to $230,000,
- an increase in the amount that defines a highly compensated employee from $100,000 to $105,000
- and an increase in the amount that defines a key employee under the top-heavy plan provisions from $145,000 to $150,000
Other 2007-2008 Pension Plan Adjustments
|
2006
|
2007
|
2008
|
Elective Deferrals |
$15,000
|
$15,500 |
$15,500 |
Age 50 Catch Up * |
$5,000
|
$5,000 |
$5,000 |
Limit on Defined Benefit Plan |
$175,000
|
$180,000 |
$185,000 |
Limit on Defined Contribution Plan |
$44,000
|
$45,000 |
$46,000 |
Limit on Covered Compensation |
$220,000
|
$225,000 |
$230,000 |
Highly Comp. Employee |
$100,000
|
$100,000 |
$105,000 |
Maximum IRA Contribution |
$4,000
|
$4,000 |
$5,000 |
Age 50 Catch Up |
$1,000
|
$1,000 |
$1,000 |
Deductible IRA Phase Out** |
$75,000-$85,000 MFJ
$50,000-$60,000 Single
|
$83,000-$103,000 MFJ
$52,000-$62,000 Single |
$85,000-$105,000 MFJ
$53,000-$63,000 Single |
Deductible IRA Phase Out Spouse*** |
$150,000-$160,000
|
$156,000-$166,000 |
$159,000-$169,000 |
Roth IRA Phase Out |
$150,000-$160,000 MFJ
$95,000-$110,000 Single
$100,000 Rollover
|
$156,000-$166,000 MFJ
$99,000-$114,000 Single
$100,000 Rollover |
$159,000-$169,000 MFJ
$101,000-$116,000 Single
$100,000 Rollover |
IRA Credit 50% Limitation**** |
$0 - $30,000 MFJ
$0 -$22,500 HOH
$0 - $15,000 Single
|
$0 - $31,000 MFJ
$0 -$23,250 HOH
$0 - $15,500 Single |
$0 - $32,000 MFJ
$0 -$24,000 HOH
$0 - $16,000 Single |
IRA Credit 20% Limitation |
$30,001 - $32,500 MFJ
$22,501 -$24,375 HOH
$15,001 - $16,250 Single |
$31,001 - $34,000 MFJ
$23,251 -$25,500 HOH
$15,501 - $17,000 Single
|
$32,001 - $34,500 MFJ
$24,001 -$25,875 HOH
$16,001 - $17,250 Single |
IRA Credit 10% Limitation |
$32,501 - $50,000 MFJ
$24,376 -$37,500 HOH
$16,251 - $25,000 Single
|
$34,001 - $52,000 MFJ
$25,501 -$39,000 HOH
$17,001 - $26,000 Single |
$34,501 - $53,000 MFJ
$25,876 -$39,750 HOH
$17,251 - $26,500 Single |
Pension Plan Startup Costs Credit |
$500 Credit (50% of Costs)
First 3 Years of Plan
Less than 100 Employees
|
$500 Credit (50% of Costs)
First 3 Years of Plan
Less than 100 Employees |
$500 Credit (50% of Costs)
First 3 Years of Plan
Less than 100 Employees |
Maximum Earnings Subject to SS |
$94,200 |
$97,500
|
$102,000 |
SS Earnings Required for Credit |
$970/QTR
|
$1,000/QTR |
$1,050/QTR |
Retirement Earnings Exempt Under FR***** |
$1,040/MO
|
$1,080/MO |
$1,130/MO |
Retirement Earnings Exempt Over FR****** |
$2,770/MO
|
$2,870/MO |
$3,010/MO |
Maximum SS |
$2,053/MO
|
$2,116/MO |
$2,185/MO |
* If the individual has attained the age of 50 before the close of the taxable year.
** If both spouses are covered by a pension plan.
*** If only one spouse is covered by a pension plan.
****Non-refundable credit, dependents and full-time students are not eligible.
*****One dollar in benefits will be withheld for every $2 in earnings above the limit (under full retirement age).
******One dollar in benefits will be withheld for every $3 in earnings above the limit (year reaches retirement).
There is no limit on earnings beginning the month an individual attains full retirement age (FR) (FR is 65 for those born prior to 1938, 67 for those born after 1959, with a sliding scale between 65-67 for all others.)
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