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Cost Of Living Adjustments for Employee Benefits Plans for 2011

November 9, 2010

The Internal Revenue Service has announced the “adjusted” numbers that will apply to various limits on contributions to and benefits under retirement plans. The adjusted figures apply generally to employee benefit plans for “plan years” beginning in 2011. Some of the adjusted amounts, however, apply to calendar year 2011.

The numbers remain the same as 2010 and are as follows:

1. The limit on an employee’s contributions made during the 2011 calendar year to a 401(k) or a 403(b) tax-sheltered annuity remains at $16,500. Participants who are age 50 or older by the end of 2011 may make an additional $5,500 “catch-up” contribution.

2. The limit on an employee’s contributions made during the 2011 calendar year to a 457 plan sponsored by a governmental unit or a tax-exempt organization remains at $16,500. Participants who are age 50 or older by the end of the 2011 plan year may make an additional $5,500 “catch-up” contribution.

3. The limit on an employee’s compensation that may be considered for retirement plan purposes remains at $245,000 for plan years beginning in 2011.

4. The limit on annual benefits payable under “defined benefit” plans remains at $195,000 for plan years beginning in 2011.

5. The limit on allocations to individual. accounts in “defined contribution” plans remains at the smaller of $49,000 or 100% of compensation for plan years beginning in 2011.

6. The taxable wage base for OASDI purposes under the Social Security laws remains the same at $106,800. This figure may affect the “integration level” for plans that are integrated with Social Security.

7. Employees will be “highly compensated employees” for the plan year beginning in 2011 if their compensation in the 2010 plan year exceeded $110,000.

8. Health savings accounts (HSAs) are a means of paying health care expenses under a “high deductible health care plan.” To be a high deductible health care plan, the deductible must be at least the minimum deductible amount for the year and out-of pocket expenses cannot exceed the maximum out-of pocket amount for the year. Contributions to an HSA may be made by the employer or the employee, but the total annual contribution amount from both sources cannot exceed the smaller of:

  • plan’s deductible for the year; or
  • the maximum contribution amount for the year.

For 2011, the adjusted amounts for HSAs are:

  • Maximum contribution: Family: $6,150 Self: $3,050
  • Minimum deductible: Family: $2,400 Self: $1,200
  • Maximum out of pocket: Family: $11,900 Self: $5,950

Participants who attain age 55 by the end of the 2011 plan year may make an additional $1,000 catch-up” contribution to their HSAs.

9. The maximum amounts that Social Security recipients may earn during 2011 without loss of Social Security benefits are as follows:

  • Recipients ages 62 through full retirement age: $1,180/mo. ($14,160/yr.)
  • age: $3,140/mo. up to the month the recipient reaches full retirement age.
  • There is no limit on earnings beginning with the month the recipient reaches full retirement age.
  • “Full retirement age” for Social Security is:

YEAR OF BIRTH

FULL RETIREMENT AGE

Prior to 1938

Age 65

1938

Age 65 & 2 months

1939

Age 65 & 4 months

1940

Age 65 & 6 months

1941

Age 65 & 8 months

1942

Age 65 &10 months

1943-1954

Age 66

 

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