IRS Releases Updated Qualified Plan Limitations for 2008

October 19, 2007

On October 18, the IRS released the inflation-adjusted limitations applicable to tax-qualified retirement plans for 2008.  The increases are pursuant to inflation adjustment factors included in the applicable sections of the Internal Revenue Code.  The limits are adjusted only in specified increments and, as a result, some of the key limits are unchanged from 2007.

The key 2008 limits are as follows:  


2008 Limit

2007 Limit

402(g) Limit on Employee Elective Deferrals (Note:  This is relevant for "401(k)," "403(b)" and "457" plans.)

$15,500 (unchanged)


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.)

$5,000 (unchanged)


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.)



415(c) Limit on Annual Additions Under a Defined Contribution Plan

$46,000 (or, if less, 100% of compensation)

$45,000 (or, if less, 100% of compensation)

415(b) Limit on Annual Age 65 Annuity Benefits Payable Under a Defined Benefit Plan

$185,000 (or, if less, 100% of average "high 3" compensation)

$180,000 (or, if less, 100% of average "high 3" compensation)

414(q) Dollar Amount for Determining Highly Compensated Employee Status



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, the change also affects the specified employee determination, and thus, the group subject to the six-month delay under Section 409A.)



Social Security "Wage Base" for Plans Integrated With Social Security




Employers should ensure that these changes are coordinated with their payroll systems and their third-party plan administrators.  In addition, participant communications should be updated to reflect the new limits.

Gibson, Dunn & Crutcher LLP

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 (650-849-5385, [email protected]),
Charles F. Feldman (212-351-3908, [email protected]),
David West (213-229-7654, [email protected]),
David I. Schiller (214-698-3205, [email protected]),
Michael J. Collins (202-887-3551, [email protected]),
Sean Feller (213-229-7579, [email protected]),
Amber Busuttil Mullen (213-229-7023, [email protected]),
Jennifer Patel (202-887-3564, [email protected]), 
Chad Mead (214-698-3134, [email protected]), 
Kimberly Woolley (415-393-8225, [email protected]), or
Jonathan Rosenblatt (650-849-5317, [email protected]).

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