The IRS and the Social Security Administration have announced the cost-of-living adjustments for various benefit plan limits for 2012. Limits affecting retirement plans are shown directly below and the limits for health and certain other fringe benefit plans are shown on the following page.
Retirement Plan Limits
The IRS updated the retirement plan limits effective for the plan year that begins on or after January 1, 2012. Unlike 2011, most limits received a cost-of-living adjustment in 2012. The 2012 limits, as well as the 2011 limits, are as follows: 2011 2012 Maximum Elective Deferrals to §401(k), §403(b), and §457(b) Plans $16,500 $17,000 Maximum Catch-up Elective Deferrals to Plans other than SIMPLE Plans (age 50 by the end of the year) $5,500 $5,500 Section 415 Limits- Defined Contribution Plan Annual Addition Maximum - Defined Benefit Plan Dollar Maximum- Defined Benefit Plan Compensation Multiplier used to determine limit for participants who separated from service – After December 31, 2009 Prior to January 1, 2010 $49,000$195,0001.01181.0000 $50,000$200,0001.0376 1.0327 Annual Compensation Limit under §§401(a)(17), 404(l) and 408(k)Special limit for Governmental Plans in effect on July 1, 1993 $245,000$360,000 $250,000$375,000 §414(q) Highly Compensated Employee definition $110,000 $115,000 §416(i) Top-Heavy Compensation – Used to determine officers as key employees $160,000 $165,000 §409(o) Maximum ESOP Account Balance Subject to 5-Year Distribution Period $985,000 $1,015,000 ESOP Amount Used to Determine Extensions of the 5-Year Distribution Period $195,000 $200,000 SIMPLE Plans Qualified Salary Reduction Limit under §408(p)§§401(k)(11) and 408(p) Catch-up Contributions (age 50 by end of year) $11,500$2,500 $11,500$2,500 §408A Maximum Roth IRA Contribution (AGI Limit)Married Filing Joint Return or Qualifying WidowerAll other Taxpayers (other than married filing separately) $169,000$107,000 $173,000$110,000 Social Security Tax and Wage Base
2011
2012
Maximum Elective Deferrals to §401(k), §403(b), and §457(b) Plans
$16,500
$17,000
Maximum Catch-up Elective Deferrals to Plans other than SIMPLE Plans (age 50 by the end of the year)
$5,500
Section 415 Limits- Defined Contribution Plan Annual Addition Maximum - Defined Benefit Plan Dollar Maximum- Defined Benefit Plan Compensation Multiplier used to determine limit for participants who separated from service – After December 31, 2009 Prior to January 1, 2010
$49,000$195,0001.01181.0000
$50,000$200,0001.0376 1.0327
Annual Compensation Limit under §§401(a)(17), 404(l) and 408(k)Special limit for Governmental Plans in effect on July 1, 1993
$245,000$360,000
$250,000$375,000
§414(q) Highly Compensated Employee definition
$110,000
$115,000
§416(i) Top-Heavy Compensation – Used to determine officers as key employees
$160,000
$165,000
§409(o) Maximum ESOP Account Balance Subject to 5-Year Distribution Period
$985,000
$1,015,000
ESOP Amount Used to Determine Extensions of the 5-Year Distribution Period
$195,000
$200,000
SIMPLE Plans Qualified Salary Reduction Limit under §408(p)§§401(k)(11) and 408(p) Catch-up Contributions (age 50 by end of year)
$11,500$2,500
§408A Maximum Roth IRA Contribution (AGI Limit)Married Filing Joint Return or Qualifying WidowerAll other Taxpayers (other than married filing separately)
$169,000$107,000
$173,000$110,000
Social Security Tax and Wage Base
For calendar year 2012, the Social Security taxable wage base increases to $110,100 (up from $106,800 in 2011). The employer portion of the Social Security tax remains unchanged at 6.2%. With respect to the employee portion of the Social Security tax, H.R. 3765 extends the rate of 4.2% that applied for 2011 through February 29, 2012. Congress and the President are currently working on a full year extension. The new “two-month” extension also imposes a “recapture” rule to those employees who receive more than $18,350 in wages during the two-month period. The additional income tax on those higher-income employees is an amount equal to 2% of the amount of wages they receive during the two-month period that is in excess of $18,350 but not greater than the annual limit of $110,100.
Health and Fringe Benefit Plan Limits
The Service has also released health and fringe benefit plan adjustments effective January 1, 2012. The 2012 limits, as well as the 2011 limits, are as follows:
Health Savings Accounts – HDHP Limits (§223(c)(2)(A))HDHP Minimum Annual Deductible – Self OnlyHDHP Minimum Annual Deductible – FamilyHDHP Out-of-Pocket Maximum – Self OnlyHDHP Out-of-Pocket Maximum – Family
$1,200$2,400$5,950$11,900
$1,200$2,400$6,050$12,100
Health Savings Accounts – Maximum Contribution Limits (§223(b))Self OnlyFamilyCatch-Up Contributions (age 55 by the end of the year)
$3,050$6,150$1,000
$3,100$6,250$1,000
Medical Savings Accounts – Health Plan Limits (§220(c)(2)(A))Annual Deductible – Self OnlyAnnual Deductible – FamilyOut-of-Pocket Maximum – Self OnlyOut-of-Pocket Maximum – Family
$2,050 to $3,050$4,100 to $6,150$4,100$7,500
$2,100 to $3,150$4,200 to $6,300$4,200$7,650
Medical Savings Accounts – Maximum Contribution Limits (§220(b)(2)) Self Only (65% of deductible) Family (75% of deductible)
$1,300 to $1,950$3,037 to $4,537
$1,365 to $2,047$3,150 to $4,725
Transportation Fringe Benefits – Monthly Limits (§132(f)(2))ParkingTransit Passes and Vanpooling (combined)*
$230$230
$240$125
Employer Adoption Assistance Exclusion (§137)Maximum Gross Income Exclusion** Modified AGI Phase-out – StartModified AGI Phase-out – End
$13,360$185,210$225,210
$12,650$189,710$229,710
* The temporary increase in the transit pass limit expires at the end of 2011. Pending bills in Congress would extend the higher limit for 2012, but no agreement has been reached. (The extension for 2011 occurred in December 2010.) ** The temporary increase in the maximum adoption assistance exclusion expires at the end of 2011.
Pro Bono of the Year awards in 2011 from Georgia Appleseed, Pro Bono Partnership of Atlanta and North Carolina Bar Association (IP
