Each Monday 401kBasics posts a new tip as a part of our series “Plan Sponsor Quick Tips”. This series is designed to assist plan sponsors in filling their fiduciary role and running their retirement plan efficiently. Your feedback or suggestions on future articles is welcome.
On October 20, 2011 the IRS announced the cost of living adjustments for the tax year 2012. The adjustments are comprised of dollar limitations on benefits and contributions under qualified plans. Some limitations for 2012 changed while others remained the same:
- Annual Compensation – This figure increased from $245000.00 to $250000.00
- Elective Deferrals – These increased from $16500.00 to $17000.00
- Catch-up Contributions – The contribution limit for anyone over the age of 50 remains at $5500.00
These COLA increases will allow participants in a retirement plan to defer more than they have in the past. A complete list of dollar limitations in prior years can be found by clicking here. As always, when in doubt, please reach out to your service providers for further clarification on these matters!
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