IRS Announces Retirement Plan COLA Adjustments For 2009

On October 16, 2008, the Internal Revenue Service issued IR

2008-118, announcing the cost-of-living adjustments applicable to

retirement plan limits for 2009. Most of the limits increase for

2009, as the increase in the cost-of-living index met the statutory

threshold that triggers the adjustment. A summary of the current

2008 limits and the new 2009 limits follows:

Retirement Plan Limits

2008

2009

Maximum Elective Deferral Limit Under 402(g)

(applicable to 401(k), 403(b) and 457(b) Plans)

$15,500

$16,500

SIMPLE Plan Salary Deferral Limit (408(p))

$10,500

$11,500

Maximum Catch-Up Contribution Limit Under 414(v)

(Plans other than SIMPLE Plans)

$5,000

$5,500

Maximum Catch-Up Contribution Limit Under 401(k)(11) and

408(p)

$2,500

$2,500

Defined Benefit Plan - 415 Annual Benefit Limit

$185,000

$195,000

Defined Benefit Plan Compensation Multiplier?for

participants who separated from service prior to January 1,

2009

1.0236

1.0530

Defined Contribution Plan - 415 Annual Addition Limit

$46,000

$49,000

Annual Compensation Limit Under 401(a)(17), 404(l) and

408(k)

$230,000

$245,000

Special Annual Compensation Limit for Governmental Plans in

effect on July 1, 1993

$345,000

$360,000

Highly Compensated Employee Definition (414(q))

$105,000

$110,000

Key Employees (416 Top Heavy Compensation for Officers)

$150,000

$160,000

Maximum ESOP Account Balance Subject to Five-Year Distribution

Period

$935,000

$985,000

ESOP Dollar Amount used to determine the lengthening of the

Five-Year Distribution Period

$185,000

$195,000

Social Security Wage Base

The Social Security Administration also announced on October 16,

2008 a $4,800 increase in the wage base for computing the Social

Security tax (OASDI) for 2009 (http://www.ssa.gov/pressoffice/pr/2009cola-pr.htm).

The increase of $4,800 raises the Social Security tax wage base

from $102,000 in 2008 to $106,800 in 2009.

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