Qualified Retirement Plans must take various dollar limits into consideration. Some of these are indexed and can therefore change on occasion. Below are the new figures for 2009, as well as the figures for 2008.
| LIMITS | 2008 | 2009 |
|---|---|---|
| 401(k) Deferral Contribution Limit (Calendar Year) | $15,500 | $16,500 |
| 401(k) Catch-up Contribution Limit (over age 50) | $5,000 | $5,500 |
| Annual Contribution Limit Sec. 415 (Defined Contribution Plans) | $46,000 | $49,000 |
| Plan Compensation Limit | $230,000 | $245,000 |
| Social Security Wage Base | $102,000 | $106,800 |
| Definition of Highly Compensated Employee | $105,000 | $110,000 |
Determination of Highly Compensated Employees
1. Employees owning more than 5% of a company, as well as an employee who is a spouse, child, parent or grandparent of an employee owning more than 5% of a company will always be considered highly compensated.
2. Employees who earned more than $105,000 in 2008 will be considered highly compensated for 2009 non-discrimination testing.
3. Employees who earned more than $110,000 in 2009 will be considered highly compensated for 2010 non-discrimination testing.
2009 Maximum 401(k) Contributions:
o The maximum salary deferral contribution an employee can make is $16,500.
o If the employee is age 50 or older, the maximum is $22,000.
o If you have an employer match or other employer contribution to your plan, the maximum total contribution is $49,000 for employees under age 50 and $54,500 for employees over the age of 50.
If you have any questions about how these limits will affect your 401(k) plan or employees, please contact the Johnson & Dugan Retirement Services Team at 650-266-9700.
This Johnson & Dugan Legislative Update is not intended to be exhaustive nor should any discussion or opinions be constructed as legal advice. Readers should contact legal counsel for legal advice.
