Pension Plan Limits for the Tax Years

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Albert Montgomery
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1 Pensin Plan Limits fr the Tax Years On Octber 20, 2011, the Internal Revenue Service annunced cst f living adjustments affecting dllar limitatins fr pensin plans and ther retirementrelated items fr Tax Year In general, many f the pensin plan limitatins will change fr 2012 because the increase in the cst-f-living index met the statutry threshlds that trigger their adjustment. Hwever, ther limitatins will remain unchanged. The elective deferral (cntributin) limit fr emplyees wh participate in 401k, 403(b), mst 457 plans, and the federal gvernment's Thrift Savings Plan is increased frm $16,500 t $17,000. The catch-up cntributin limit fr thse aged 50 and ver remains unchanged at $5,500. The deductin fr taxpayers making cntributins t a traditinal IRA is phased ut fr singles and heads f husehld wh are cvered by a wrkplace retirement plan and have mdified adjusted grss incmes (AGI) between $58,000 and $68,000, up frm $56,000 and $66,000 in Fr married cuples filing jintly, in which the spuse wh makes the IRA cntributin is cvered by a wrkplace retirement plan, the incme phase-ut range is $92,000 t $112,000, up frm $90,000 t $110,000. Fr an IRA cntributr wh is nt cvered by a wrkplace retirement plan and is married t smene wh is cvered, the deductin is phased ut if the cuple's incme is between $173,000 and $183,000, up frm $169,000 and $179,000. The AGI phase-ut range fr taxpayers making cntributins t a Rth IRA is $173,000 t $183,000 fr married cuples filing jintly, up frm $169,000 t $179,000 in Fr singles and heads f husehld, the incme phase-ut range is $110,000 t $125,000, up frm $107,000 t $122,000. Fr a married individual filing a separate return wh is cvered by a retirement plan at wrk, the phase-ut range remains $0 t $10,000. The AGI limit fr the saver's credit (als knwn as the retirement savings cntributins credit) fr lw-and mderate-incme wrkers is $57,500 fr married cuples filing jintly, up frm $56,500 in 2011; $43,125 fr heads f husehld, up frm $42,375; and $28,750 fr married individuals filing separately and fr singles, up frm $28,250. Chart f Selected Limits 401k Plan Limits fr Plan Year 401k Elective Deferrals Annual Defined Cntributin Limit $17,000 $16,500 $16,500 $16,500 $15,500 $15,500 $15,000 $50,000 $49,000 $49,000 $49,000 $46,000 $45,000 $44,000

2 Annual Cmpensatin Limit Catch-Up Cntributin Limit Highly Cmpensated Emplyees $250,000 $245,000 $245,000 $245,000 $230,000 $225,000 $220,000 $5,500 $5,500 $5,500 $5,500 $5,000 $5,000 $5,000 $115,000 $110,000 $110,000 $110,000 $105,000 $100,000 $100,000 Nn-401k Related Limits 403(b)/457 Elective Deferrals SIMPLE Emplyee Deferrals SIMPLE Catch-Up Deferral SEP Minimum Cmpensatin SEP Annual Cmpensatin Limit Scial Security Wage Base $17,000 $16,500 $16,500 $16,500 $15,500 $15,500 $15,000 $11,500 $11,500 $11,500 $11,500 $10,500 $10,500 $10,000 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $550 $550 $550 $550 $500 $500 $450 $250,000 $245,000 $245,000 $245,000 $230,000 $225,000 $220,000 $110,100 $106,800 $106,800 $106,800 $102,000 $97,500 $94,200 Belw are details n bth the unchanged and adjusted limitatins fr Sectin 415 f the Internal Revenue Cde prvides fr dllar limitatins n benefits and cntributins under qualified retirement plans. Sectin 415(d) requires that the Cmmissiner annually adjust these limits fr cst f living increases. Other limitatins applicable t deferred cmpensatin plans are als affected by these adjustments under Sectin 415. Under Sectin 415(d), the adjustments are t be made pursuant t adjustment prcedures which are similar t thse used t adjust benefit amunts under Sectin 215(i)(2)(A) f the Scial Security Act. The limitatins that are adjusted by reference t Sectin 415(d) generally will change fr 2012 because the increase in the cst-f-living index met the statutry threshlds that trigger their adjustment. Fr example, the limitatin under Sectin 402(g)(1) n the exclusin fr elective deferrals described in Sectin 402(g)(3) will increase frm $16,500 t $17,000 fr This limitatin affects elective deferrals t Sectin 401k plans, Sectin 403(b) plans, and the Federal Gvernment's Thrift Savings Plan.

3 Effective January 1, 2012, the limitatin n the annual benefit under a defined benefit plan under sectin 415(b)(1)(A) is increased frm $195,000 t $200,000. Under sectin 1.415(d)-1(a)(2)(ii) f the Incme Tax Regulatins, the adjustment t the limitatin under a defined benefit plan under sectin 415(b)(1)(B) is determined using a special rule. This special rule takes int accunt the fllwing recent histry f changes in the cst-f-living indexes: (1) the cst-f-living index fr the quarter ended September 30, 2009, was less than the cst-f-living index fr the quarter ended September 30, 2008; (2) the cst-f-living index fr the quarter ended September 30, 2010, was greater than the cst-f-living index fr the quarter ended September 30, 2009, but less than the cst-f-living index fr the quarter ended September 30, 2008; and (3) the cst-f-living index fr the quarter ended September 30, 2011, was greater than the cst-f-living indexes fr all prir perids. Fr a participant wh separated frm service befre January 1, 2010, the limitatin under a defined benefit plan under Sectin 415(b)(1)(B) fr 2012 is cmputed by multiplying the participant's 2011 cmpensatin limitatin by in rder t reflect changes in the cst-f-living index frm the quarter ended September 30, 2008, t the quarter ended September 30, Fr a participant wh separated frm service during 2010 r 2011, the limitatin under a defined benefit plan under Sectin 415(b)(1)(B) fr 2012 is cmputed by multiplying the participant's 2011 cmpensatin limitatin by in rder t reflect changes in the cst-f-living index frm the quarter ended September 30, 2010, t the quarter ended September 30, The limitatin fr defined cntributin plans under Sectin 415(c)(1)(A) is increased in 2012 frm $49,000 t $50,000. The Cde prvides that varius ther dllar amunts are t be adjusted at the same time and in the same manner as the dllar limitatin f Sectin 415(b)(1)(A). After taking int accunt the applicable runding rules, the amunts fr 2012 are as fllws: The limitatin under Sectin 402(g)(1) n the exclusin fr elective deferrals described in Sectin 402(g)(3) is increased frm $16,500 t $17,000. The annual cmpensatin limit under Sectins 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased frm $245,000 t $250,000. The dllar limitatin under Sectin 416(i)(1)(A)(i) cncerning the definitin f key emplyee in a tp-heavy plan is increased frm $160,000 t $165,000. The dllar amunt under Sectin 409()(1)(C)(ii) fr determining the maximum accunt balance in an emplyee stck wnership plan subject t a 5 year

4 distributin perid is increased frm $985,000 t $1,015,000, while the dllar amunt used t determine the lengthening f the 5 year distributin perid is increased frm $195,000 t $200,000. The limitatin used in the definitin f highly cmpensated emplyee under Sectin 414(q)(1)(B) is increased frm $110,000 t $115,000. The dllar limitatin under Sectin 414(v)(2)(B)(i) fr catch-up cntributins t an applicable emplyer plan ther than a plan described in Sectin 401k(11) r Sectin 408(p) fr individuals aged 50 r ver remains unchanged at $5,500. The dllar limitatin under Sectin 414(v)(2)(B)(ii) fr catch-up cntributins t an applicable emplyer plan described in Sectin 401k(11) r Sectin 408(p) fr individuals aged 50 r ver remains unchanged at $2,500. The annual cmpensatin limitatin under Sectin 401(a)(17) fr eligible participants in certain gvernmental plans that, under the plan as in effect n July 1, 1993, allwed cst f living adjustments t the cmpensatin limitatin under the plan under Sectin 401(a)(17) t be taken int accunt, is increased frm $360,000 t $375,000. The cmpensatin amunt under Sectin 408(k)(2)(C) regarding simplified emplyee pensins (SEPs) remains unchanged at $550. The limitatin under Sectin 408(p)(2)(E) regarding SIMPLE retirement accunts remains unchanged at $11,500. The limitatin n deferrals under Sectin 457(e)(15) cncerning deferred cmpensatin plans f state and lcal gvernments and tax-exempt rganizatins is increased frm $16,500 t $17,000. The cmpensatin amunts under Sectin (f)(5)(i) f the Incme Tax Regulatins cncerning the definitin f cntrl emplyee fr fringe benefit valuatin purpses is increased frm $95,000 t $100,000. The cmpensatin amunt under Sectin (f)(5)(iii) is increased frm $195,000 t $205,000. The Cde als prvides that several pensin-related amunts are t be adjusted using the cst-f-living adjustment under Sectin 1(f)(3). After taking the applicable runding rules int accunt, the amunts fr 2012 are as fllws: The adjusted grss incme limitatin under Sectin 25B(b)(1)(A) fr determining the retirement savings cntributin credit fr married taxpayers filing a jint return is increased frm $34,000 t $34,500; the limitatin under Sectin 25B(b)(1)(B) is increased frm $36,500 t $37,500; and the limitatin under Sectins 25B(b)(1)(C) and 25B(b)(1)(D), is increased frm $56,500 t $57,500.

5 The adjusted grss incme limitatin under Sectin 25B(b)(1)(A) fr determining the retirement savings cntributin credit fr taxpayers filing as head f husehld is increased frm $25,500 t $25,875; the limitatin under Sectin 25B(b)(1)(B) is increased frm $27,375 t $28,125; and the limitatin under Sectins 25B(b)(1)(C) and 25B(b)(1)(D), is increased frm $42,375 t $43,125. The adjusted grss incme limitatin under Sectin 25B(b)(1)(A) fr determining the retirement savings cntributin credit fr all ther taxpayers is increased frm $17,000 t $17,250; the limitatin under Sectin 25B(b)(1)(B) is increased frm $18,250 t $18,750; and the limitatin under Sectins 25B(b)(1)(C) and 25B(b)(1)(D), is increased frm $28,250 t $28,750. The deductible amunt under 219(b)(5)(A) fr an individual making qualified retirement cntributins remains unchanged at $5,000. The applicable dllar amunt under Sectin 219(g)(3)(B)(i) fr determining the deductible amunt f an IRA cntributin fr taxpayers wh are active participants filing a jint return r as a qualifying widw(er) is increased frm $90,000 t $92,000. The applicable dllar amunt under Sectin 219(g)(3)(B)(ii) fr all ther taxpayers (ther than married taxpayers filing separate returns) is increased frm $56,000 t $58,000. The applicable dllar amunt under Sectin 219(g)(7)(A) fr a taxpayer wh is nt an active participant but whse spuse is an active participant is increased frm $169,000 t $173,000. The adjusted grss incme limitatin under Sectin 408A(c)(3)(C)(ii)(I) fr determining the maximum Rth IRA cntributin fr married taxpayers filing a jint return r fr taxpayers filing as a qualifying widw(er) is increased frm $169,000 t $173,000. The adjusted grss incme limitatin under Sectin 408A(c)(3)(C)(ii)(II) fr all ther taxpayers (ther than married taxpayers filing separate returns) is increased frm $107,000 t $110,000. The dllar amunt under Sectin 430(c)(7)(D)(i)(II) used t determine excess emplyee cmpensatin with respect t a single-emplyer defined benefit pensin plan fr which the special electin under sectin 430(c)(2)(D) has been made is increased frm $1,014,000 t $1,039,000. Imprtant Disclsure Infrmatin: Infrmatin has been cmpiled slely by Fiduciary Investment Advisrs, LLC, and has nt been independently verified. Fiduciary Investment Advisrs, LLC has relied upn infrmatin prvided by utside surces. A cpy f ur current written disclsure statement discussing ur advisry services and fees remains available fr yur review upn request.

2017 Updates as of

2017 Updates as of 11-1-2016 South Carolina Withholding Tax Tables are being updated for the first time in 25 years! On January 1, 2017 new withholding tables will be in effect for South Carolina and will