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IRS announces 2012 dollar limits on contributions and benefits

Each year the Internal Revenue Service announces the cost-of-living adjustments applicable to qualified retirement plans for the following year. Unlike 2001 in which most limits did not change from the prior year, most limits increased:

Following are the key retirement plan limits announced yesterday by the IRS:

  • The 401(k) and 403(b) limit for employee contributions increases to $17,000 from $16,500.
  • The catch-up contribution limit for participants age 50 and older remains the same at $5,500.
  • The maximum allocation to a defined contribution plan increases to $50,000 from $49,000.
  • The maximum annual benefit payable from a defined benefit pension plan increases to $200,000 from $195,000.
  • The maximum annual compensation that can be recognized for retirement plan purposes increases to $250,000 from $245,000.
  • The threshold compensation for Highly Compensated Employee increases to $115,000 form $110,000.

Here is a link to our chart listing all the retirement plan limits for 2012 compared to 2011.

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