IRS Announces Limits for 2012

On October 19, the Social Security Administration announced a 3.6 percent cost-of-living adjustment.  Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $110,100 from $106,800.

On October 20, the Internal Revenue Service announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2012. In general, many of the pension plan limitations will change for 2012 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged.

Income Subject To Social Security
From $106,800 to $110,100
Pre-tax employee elective deferrals to 401(k), 403(b), and 457(b) plans (without regard to “catch-up” contributions): IRC §§ 402(g)(1), 457(e)(15)
From $16,500 to $17,000
Pre-tax employee catch-up contributions to 401(k), 403(b), and 457(b) plans for employees 50+
From $5,500 to $5,500
Maximum annual contribution to defined contribution plans: IRC § 415(c)(1)(A)
From $49,000 to $50,000
Maximum annual benefit from defined benefit pension plans: IRC § 415(b)(1)(A)
From $195,000 to $200,000
Maximum annual compensation taken into account: IRC §§ 401(a)(17), 404(l)
From $245,000 to $250,000
Compensation limit for determining “highly compensated employees”:IRC § 414(q)(1)(B)
From $110,000 to $115,000
Key employee officer compensation: IRC § 416(i)(1)(A)(i)
From $160,000 to $165,000