J&D Benefits Perspective

2010 Indexed Figures for Qualified Retirement Plans

Qualified Retirement Plan dollar limits will not change in 2010. Below is a chart of the contributions limits for 2009 and 2010.

LIMITS	2009	2010
401(k) Deferral Contribution Limit (Calendar Year)	$16,500	$16,500
401(k) Catch-up Contribution Limit (over age 50)	$5,500	$5,500
Annual Contribution Limit Sec. 415 (Defined Contribution Plans)	$49,000	$49,000
Plan Compensation Limit	$245,000	$245,000
Social Security Wage Base	$106,800	$106,800

2009 Indexed Figures for Qualified Retirement Plans

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

2008 Indexed Figures for Qualified Retirement Plans

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 2008, as well as the figures for 2007.

LIMITS	2007	2008
401(k) Deferral Contribution Limit (Calendar Year)	$15,500	$15,500
401(k) Catch-up Contribution Limit (over age 50)	$5,000	$5,000
Annual Contribution Limit Sec. 415 (Defined Contribution Plans)	$45,000	$46,000
Plan Compensation Limit	$225,000	$230,000
Social Security Wage Base	$97,500	$102,000
Definition of Highly Compensated Employee	$100,000	$105,000

Key 401(k) Features and Changes due to the Passage of the Pension Protection Act 2006

Virginia K. Sutton, Account Executive, Johnson & Dugan

On August 17, 2006, the Pension Protection Act of 2006 (PPA 2006) was signed into law. While much of the new law focuses on defined benefit plans, there are several key provisions relating to 401(k) plans. Plans must operationally comply with PPA when its provisions become effective, and they may adopt plan amendments for PPA by the end of the plan year in which the provision is enacted. If adding a provision allowed by PPA has anti-cutback implications, meaning the IRS would view the additional feature as limiting a protected benefit, right or feature for a non-highly compensated employee, then the plan document must be amended for that change before the beginning of the plan year.

The following are notable provisions of PPA that will be available in 2007 or later if noted.

Celebrate National 401(k) Day on September 8

National 401(k) Day is an annual celebration that encourages employers to set aside time at the workplace to spotlight the importance of their employer-sponsored profit sharing and 401(k) plans. Sponsored by the Profit Sharing/401(k) Council of America (PSCA), this year’s theme, Trading Places, reminds workers that saving now in their employer-sponsored 401(k) can help them trade work for the retirement life they want. A variety of free materials is available at www.401kday.org .

The Buzz on Roth 401(k)

Susan Weatherhead, Pension Account Executive, Johnson & Dugan

The big buzz in the 401k World this year is the “Roth 401k”. While many plan sponsors have been anxious to implement this after-tax feature since its announcement in 2001, few are rushing to adopt this new provision since it became available at the beginning of 2006.

EGTRRA (Economic Growth and Tax Relief Reconciliation Act of 2001) established Roth 401ks, which follow the mold of Roth IRAs by permitting after-tax contributions with tax-free distributions if certain conditions are met. “Qualified” distributions from Roth 401k accounts are tax-free if they meet certain conditions. That is, the distribution must be made after age 59 ½, disability or death. AND, it must occur after the expiration of a 5-year participation period.

Auto Enrollment Increases 401(k) Balances

HRinsider August, 2005

With the popularity of 401(k) accounts on the rise, a small but increasing number of employers are adding automatic enrollment to their plans as a way to deal with issues ranging from recruiting to low participation rates to worker inertia for saving for the future. The major advantage of automatic enrollment is that workers have to opt out to prevent a portion of their paychecks from being stashed away for retirement.