print this articlePlan Limitations for 2008
WASHINGTON — The Bureau of Labor Statistics today released the September inflation figures and the Social Security Administration released the 2008 benefit and wage amounts. Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. It also requires that the Commissioner annually adjust these limits for cost of living increases.
Many of the pension plan limitations will change for 2008 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, for others, the limitation will remain unchanged. For example, the limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) remains unchanged at $15,500. This limitation affects elective deferrals to Section 401(k) plans and to the Federal Government’s Thrift Savings Plan, among other plans.
Pension Plan and Social Security Limitations for 2008 | |
| 401(k), 403(b) and 457 Deferral Limit | $15,500 |
| 401(k), 403(b) and 457 Catch-up Contribution Limit | $5,000 |
| SIMPLE 401(k)/IRA Deferral Limit | $10,500 |
| SIMPLE 401(k)/IRA Catch-up Contribution Limit | $2,500 |
| Annual Compensation Limit | $230,000 |
| Defined Benefit Plan 415(b) Limit | $185,000 |
| Defined Contribution Plan 415(c) Limit | $46,000 |
| Dollar Limit for Determining HCEs in Next Plan Year | $105,000 |
| Dollar Limit for Key Employees | $150,000 |
| Social Security Taxable Wage Base | $102,000 |
The SSA announced that the Bureau of Labor Statistics’ Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), from the 3rd quarter of 2006 to the 3rd quarter of 2007 was 2.3%. This was the basis for the pension and taxable wage base increases.
It should be noted that the new dollar limit for HCEs is applied to compensation in 2008. Thus, in calendar year plans and plans that have elected a calendar year lookback, a participant making $100,000 or more in 2007 will be an HCE in 2008. For non-calendar year plans that have not made the calendar year election, the new limit applies to compensation in plan years beginning in 2007 and is used to determine HCEs in plan