November 1, 2010
On October 28, 2010, the IRS released the inflation-adjusted limitations applicable to tax-qualified retirement plans for 2011. Due to low inflation, the limitations have not changed from those applicable for 2010. In addition to the impact of these limitations on tax-qualified retirement plans, the compensation limit under section 401(a)(17) of the Internal Revenue Code also affects the amount of severance pay that may be excludable from coverage under section 409A of the Code in certain circumstances.
The key 2011 limits are as follows:
|
Limitation |
2011 Limit |
|
402(g) Limit on Employee Elective Deferrals (Note: This is relevant for "401(k)," "403(b)" and "457" plans, and for certain limited purposes under Code Section 409A.) |
$16,500 |
|
414(v) Limit on "Catch-Up Contributions" for Employees Age 50 and Older (Note: This is relevant for "401(k)," "403(b)" and "457" plans.) |
$5,500 |
|
401(a)(17) Limit on Includible Compensation (Note: This applies to compensation taken into account in determining contributions or benefits under qualified plans. It also impacts the "two times/two years" exclusion from Code Section 409A coverage of payments made solely in connection with involuntary terminations of employment.) |
$245,000 |
|
415(c) Limit on Annual Additions Under a Defined Contribution Plan |
$49,000 (or, if less, 100% of compensation) |
|
415(b) Limit on Annual Age 65 Annuity Benefits Payable Under a Defined Benefit Plan |
$195,000 (or, if less, 100% of average "high 3" compensation) |
|
414(q) Dollar Amount for Determining Highly Compensated Employee Status |
$110,000 |
|
416(i) Officer Compensation Amount for "Top-Heavy" Determination (Note: Because Code Section 409A defines "specified employees" of public companies by reference to this provision, this amount also affects the specified employee determination, and thus, the group subject to the six-month delay under Section 409A.) |
$160,000 |
|
Social Security "Wage Base" for Plans Integrated with Social Security |
$106,800 |
Gibson, Dunn & Crutcher lawyers are available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn attorney with whom you work, or
Stephen W. Fackler – Palo Alto (650-849-5385, [email protected])
Charles F. Feldman – New York (212-351-3908, [email protected])
David West – Los Angeles (213-229-7654, [email protected])
David I. Schiller – Dallas (214-698-3205, [email protected])
Michael J. Collins – Washington, D.C. (202-887-3551, [email protected])
Sean C. Feller – Los Angeles (213-229-7579, [email protected])
Amber Busuttil Mullen – Los Angeles (213-229-7023, [email protected])
Chad Mead – Dallas (214-698-3134, [email protected])
Dina R. Bernstein – Los Angeles (213-229-7206, [email protected])
Aaron K. Briggs – Washington, D.C. (202-887-3773; [email protected])
Krista Hanvey – Dallas (214-698-3425; [email protected])
© 2010 Gibson, Dunn & Crutcher LLP
Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.