On October 28, 2010, the I.R.S. announced cost of living adjustments affecting dollar limitations for pension and retirement plans for 2011. In general, these limits either remain unchanged or will result in small inflation adjustments. Of note:.
- The elective deferral contribution limit for employees who participate in 401(k), 403(b), or 457(b) plans remains unchanged at $16,500.
- The catch-up contribution limit under those plans for those aged 50 and over remains unchanged at $5,500.
- The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are active participants in an employer-sponsored retirement plan and have modified adjusted gross incomes (AGI) between $56,000 and $66,000, is unchanged from 2010. For married couples filing jointly, in which the spouse who makes the IRA contribution is an active participant in an employer-sponsored retirement plan, the income phase-out range is $90,000 to $110,000, up from $89,000 to $109,000 in 2010. For an IRA contributor who is not an active participant in an employer-sponsored retirement plan and is married to someone who is an active participant, the deduction is phased out if the couple’s income is between $169,000 and $179,000, up from $167,000 to $177,000 in 2010.
- The AGI phase-out range for taxpayers making contributions to a Roth IRA is $169,000 to $179,000 for married couples filing jointly, up from $167,000 to $177,000 in 2010. For singles and heads of household, the income phase-out range is $107,000 to $122,000, up from $105,000 to $120,000 in 2010. For a married individual filing a separate return who is an active participant in an employer-sponsored retirement plan, the phase-out range remains $0 to $10,000.
- The AGI limit for the saver’s credit (also known as the retirement savings contributions credit) for low-and-moderate-income workers is $56,500 for married couples filing jointly, up from $55,500 in 2010; $42,375 for heads of household, up from $41,625 in 2010; and $28,250 for married individuals filing separately and for singles, up from $27,750 in 2010.
For more information concerning these cost of living adjustments, or any other issues involving employee benefits, please feel free to contact us.