The IRS recently announced the 2008 cost-of-living adjustments for retirement plans. These adjustments will increase several of the limitations on benefits, contributions, compensation, and other plan limitations. However, other items such as 401(k) deferral limits and catch-up contribution limits will remain unchanged.
Employee benefit plans are subject to annually adjusted dollar limitations based on inflation data from the third fiscal quarter of each year. Adjustments in the limits are rounded down and may not take effect until certain minimum dollar amounts are reached.
Highlights of the 2008 maximum dollar limitations announced by the IRS include the following:
- 401(k) elective deferrals: $15,500, unchanged from 2007
- Annual limit for SIMPLE plans: $10,500, unchanged from 2007
- SEP coverage amount: $500, unchanged from 2007
- Annual defined benefit limit: $185,000, an increase from $180,000 in 2007
- Annual defined contribution limit: $46,000, an increase from $45,000 in 2007
- Annual compensation limit: $230,000, an increase from $225,000 in 2007
- Highly compensated employee limit: $105,000, an increase from $100,000 in 2007.
To read more about these changes please click here.
Source: CCH Inc.