IRS Announces 2010 Contribution Limits
Benefit Plan Limits (2003 - 2010)
The IRS has issued the cost-of-living adjustments for 2010 that affect employee benefit plans. Most 2010 limits applicable to 401k and other plans will remain at their 2009 levels.
There are several "limits" that apply to 401k plans under the Internal Revenue Code (IRC). The limits are found in various sections of the IRC. 401k plans must comply with the various IRC limits to maintain tax-qualified status. The Internal Revenue Service (IRS) annually increases 401k plan limits to reflect changes in the Consumer Price Index (CPI). Often, adjustments are made only if the change in the limit attributable to the CPI exceeds a certain threshold (e.g., $1,000 or $5,000).
The table below shows the primary 401k plan limits in effect for 2010 and 2009. Brief descriptions of the various limits are also provided.
| Maximum Deferral and Threshold Limits for 2009 and 2010 |
| Limit |
2010 |
2009 |
| Elective Deferral Maximum for 401(k) Plans and 403(b) Plans - IRC § 402(g)(1) |
$16,500 |
$16,500 |
| Elective Deferral Maximum for 457 Plans - IRC § 457(e)(15) - (below note a) |
16,500 |
16,500 |
| Catch-Up Limit (Age 50 and Older) for 401(k), 403(b), and 457 Plans - IRC § 414(v)(2)(B)(i) |
5,500 |
5,500 |
| Maximum Contribution to a Qualified Defined Contribution Plan - IRC § 415(c)(1)(A) - (below note c) |
49,000 |
49,000 |
| Maximum Compensation Limit - IRC § 401(a)(17) - (below note d) |
245,000 |
245,000 |
| Highly Compensated Employee Salary Threshhold - IRC 414(q)(1)(B) |
110,000 |
110,000 |
| IRA Contribution Limit |
5,000 |
5,000 |
| IRA Catch-Up Limit (Age 50 and Older) - IRC § 219(b)(5)(B)(ii) |
1,000 |
1,000 |
| Social Security Maximum Taxable Earnings – OASDI |
106,800 |
106,800 |
note a - Elective deferrals are voluntary agreements in which employees elect to forego current income in return for the employer’s contributions to retirement or other benefit plans. Elective deferrals are available for a variety of tax-qualified retirement plans, including 401(k) plans.
note b - 401k plan participants who are or will be age 50 or older by the end of the plan year may voluntarily make additional “catch-up” contributions to the plan, above the maximum elective deferral limits. The maximum catch-up contribution is the lesser of (1) a specific dollar amount (the “catch-up dollar limit”) or (2) the participant’s compensation for the year reduced by any other elective deferrals made during the year.
note c - IRS limits the maximum "annual additions" that can be made to a member’s defined contribution plan account to the lesser of $49,000 in 2010, or 100% of annual compensation. In this context, annual additions include employer and employee contributions, as well as forfeitures.
note d - IRS limits the amount of compensation that can be taken into account by the plan, for the purpose of determining benefits and contributions, to $245,000 in 2010. For private sector plans, even if a plan member earns more than this amount, only $245,000 may be used in 2010 to calculate employee contributions to, or benefits provided by, the qualified plan.
So I’m 58 and wish to catch up so I can contribute up to $22,000 plus an additional $16,500?
We deposit 6% of an employee’s gross earnings in December into their 401K.
Can we give some employees less then 6% while others would receive 6% or more then 6%??
I changed employers in April. I contributed to my previous employer’s 401k until I left to go to my new job. Am I limited to an annual contribution of $16,500 across both plans, or can I contribute up to $16,500 in my new 401k in addition to what I was able to contribute to my former employer’s plan?
The text says that there are NEW 401K limits, but then the chart shows 2009 and 2010 exactly the same. So what’s new?
Very little new. Low inflation and the financial crisis caused regulators to leave things alone for a year.
Tim: no total of $22k.
Hank: matches are typically across the board, per compliance reasons.
Mary: no matter how many 401k you participate in the total amount you can defer per year in all of them is $16,500 if you’re under 50. Total meaning all together. Sorry.