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NO INCREASES IN RETIREMENT SAVINGS LIMITS - AGAIN.
WHAT CAN YOU DO?
It's Time to Rethink
Executive Compensation Arrangements
On October 28, 2010, the IRS released the 2011 Cost of Living Adjustments affecting the dollar limits for pension plans and other retirement-related items. As illustrated in the chart below, the Cost of Living Adjustments affecting employer retirement plans are unchanged from the 2010 limits (which were unchanged from the 2009 limits).
Since the amount of compensation that an employee can defer or accrue under a tax-qualified retirement plan, such as a §401(k) Plan, has not increased for the second year in a row, many executives are losing the ability to fully save for retirement through tax-qualified retirement plans. As such, it is a good time for employers to explore implementing a Supplemental Executive Retirement Plan (SERP) for their executives. In general, a SERP is a contractual arrangement between an employer and select executives that provides additional retirement benefits by taking into consideration amounts, such as compensation, above the statutory limitations noted below.
Nukk-Freeman & Cerra, P.C. is available to discuss Supplemental Executive Retirement Plans and other executive compensation arrangements and help you design and implement the program that works best for you and your executives. In addition, we are available to discuss the 2011 Cost of Living Adjustments as they relate to your plans. Please feel free to contact Liza Hecht (lhecht@nfclegal.com), Christine Gottesman (cgottesman@nfclegal.com) or the Nukk-Freeman & Cerra, P.C. attorney with whom you work with to discuss these issues, or any questions you may have regarding your employee benefit plans.
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401(k) Plan Limits
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2011
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2010
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2009
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401(k) Elective Deferrals
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$16,500
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$16,500
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$16,500
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Defined Contribution Annual Additions Limit
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$49,000
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$49,000
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$49,000
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Annual Compensation Limit
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$245,000
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$245,000
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$245,000
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Age 50 Catch-Up Deferral Limit
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$5,500
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$5,500
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$5,500
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Highly Compensated Employee Determination Threshold
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$110,000
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$110,000
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$110,000
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Non-401(k) Limits
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403(b)/457 Plan Elective Deferrals
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$16,500
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$16,500
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$16,500
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SIMPLE Employee Deferrals
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$11,500
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$11,500
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$11,500
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SIMPLE Age 50 Catch-Up Deferral Limit
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$2,500
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$2,500
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$2,500
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SEP Minimum Compensation Threshold
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$550
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$550
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$550
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SEP Annual Compensation Limit
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$245,000
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$245,000
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$245,000
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Defined Benefit Annual Additions Limit
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$195,000
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$195,000
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$195,000
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Social Security Wage Base
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$106,800
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$106,800
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$106,800
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Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency.
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