New Retirement Plan Limits For 2011
The IRS and Social Security administration have announced the limits that apply to retirement plans for 2011. While most of the limits remain unchanged from the 2010 limits, you can still continue to fund your retirement nest egg up to these allowed amounts.
Tutorial: Retirement Planning
In this article, we'll break down the recent plan changes, explain some retirement plan concepts and show you what you need to know to plan for your retirement properly.
Retirement Plan Limits for 2011
The following charts showcase the highlights of the 2011 retirement plan announcements. (For related reading, check out 2010: The Year To Convert Your IRA.)
Other Changes
Be aware of these limitations when you meet with your financial planner to review your retirement planning for the year. This is especially important if you participate in multiple employer-sponsored plans or contribute to more than one traditional/Roth IRA. Contributions in excess of these limits can result in excess contributions, which are subject to excise tax unless they are corrected in time.
Tutorial: Retirement Planning
In this article, we'll break down the recent plan changes, explain some retirement plan concepts and show you what you need to know to plan for your retirement properly.
Retirement Plan Limits for 2011
The following charts showcase the highlights of the 2011 retirement plan announcements. (For related reading, check out 2010: The Year To Convert Your IRA.)
|
Type |
2011 Limits |
2010 Limits |
||
|
Traditional and Roth IRA contribution |
$5,000 |
$5,000 |
||
|
Traditional and Roth IRA catch-up contribution |
$1,000 |
$1,000 |
||
|
SIMPLE IRA and SIMPLE 401(k) Salary deferral |
$11,500 |
$11,500 |
||
|
SIMPLE IRA and SIMPLE 401(k) catch-up |
$2,500 |
$2,500 |
||
|
401(k) , 403(b), Federal Government\'s Thrift Savings Plan, SARSEP salary deferral contribution |
$16,500 |
$16,500 |
||
|
401(k) , 403(b), Federal Government\'s Thrift Savings Plan, SARSEP catch-up |
$5,500 |
$5,500 |
||
|
457(b) salary deferral contribution |
$16,500 |
$16,500 |
||
|
457(b) catch-up contribution |
$5,500 |
$5,500 |
||
|
SEP Compensation eligibility |
$550 |
$550 |
||
|
Saver\'s tax credit |
Married filing jointly |
50% credit |
$-0- to $34,000 |
$-0- to $33,500 |
|
20% credit |
$34,000-$36,500 |
$33,500-$36,000 |
||
|
10% credit |
$36,500-$56,500 |
$36,000-$55,500 |
||
|
Head of household |
50% credit |
$-0- to $25,500 |
$-0- to $25,125 |
|
|
20% credit |
$25,500 -$27,375 |
$25,125-$27,000 |
||
|
10% credit |
$27,375-$42,385 |
$27,000-$41,625 |
||
|
Other categories |
50% credit |
$-0- to $17,000 |
$-0- to $16,750 |
|
|
20% credit |
$17,000 -$18,250 |
$16,750-$18,000 |
||
|
10% credit |
$18,250-$28,250 |
$18,000-$27,750 |
||
|
Roth IRA eligibility compensation |
Married filing jointly |
100% |
$169,000 or less |
$167,000 or less |
|
Partial |
$169,000 -$179,000 |
$167,000 - $177,000 |
||
|
None |
$179,000 + |
$177,000 + |
||
|
Married filing separately |
Partial |
Less than $10,000 |
Less than $10,000 |
|
|
None |
$10,000 or more |
$10,000 or more |
||
|
Single |
100% |
$107,000 or less |
$105,000 or less |
|
|
Partial |
$107,000- $122,000 |
$105,000- $120,000 |
||
|
None |
$122,000 or more |
$120,000 or more |
||
|
IRA deductibility compensation |
Married filing jointly and active |
100% |
$90,000 or less |
$89,000 or less |
|
Partial |
$90,000- $110,000 |
$89,000- $109,000 |
||
|
None |
$110,000 or more |
$109,000 or more |
||
|
Married filing jointly. Not active, butspouse is active |
100% |
$169,000 or less |
$167,000 or less |
|
|
Partial |
$169,000 - $179,000 |
$167,000-$177,000 |
||
|
None |
$179,000 or more |
$177,000 or more |
||
|
Married filing separately |
Partial |
Less than $10,000 |
Less than $10,000 |
|
|
None |
$10,000 or more |
$10,000 or more |
||
|
|
100% |
$56,000 or less |
$56,000 or less |
|
|
Partial |
$56,000 - $66,000 |
$56,000 - $66,000 |
||
|
None |
$66,000 or more |
$66,000 or more |
||
|
Annual addition/contribution limit under a defined contribution plan or SEP IRA |
$49,000 |
$49,000 |
||
|
Annual benefit under a defined benefit plan |
$195,000 |
$195,000 |
||
|
Compensation cap |
$245,000 |
$245,000 |
||
|
Key Employee definition |
$160,000 |
$160,000 |
||
|
Highly compensated employee definition |
$110,000 |
$110,000 |
||
|
Social Security Wage base |
$106,800 |
$106,800 |
||
Other Changes
- Limited Distribution Period for ESOPs
The dollar amount, under the limited distribution period for determining the maximum account balance in an employee stock ownership plan subject to a five-year distribution period, remains at $985,000; the dollar amount used to determine the lengthening of the five-year distribution period remains at $195,000.
- Compensation Cap for Governmental Plans
The annual compensation cap for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost of living adjustments to the compensation cap to be taken into account, remains at $360,000.
- The salary deferral limit applies across all 401(k), 403(b), the federal government's Thrift Savings Plan, SARSEP and SIMPLE plans. Therefore, regardless of the number of plans in which you participate, you salary deferral contribution cannot be more than $16,500 for the year. Additionally, your catch-up contribution cannot be more than $5,000 for the year.
- Contributions to 457(b) plans are not aggregated with contributions to 401(k), 403(b), the federal government's Thrift Savings Plan, SARSEP and SIMPLE plans. For instance, if you participate in a 457(b) plan and a 403(b) plan, you could make salary deferral contributions of $16,500 catch-ups to each plan, bringing the total to $33,000 + catch-up of $11,000. (For more insight on 457 plans, check out The 4-1-1 On 457 Plans.)
- The annual addition limit of $49,000 does not include catch-up contributions. Therefore, if you participate in a plan with a salary deferral feature, your contribution for the year can be up to $49,000 + catch-up contribution of $5,500.
- If you contribute to more than one traditional or Roth IRA, or to both a traditional and Roth IRA, your contribution to all your IRAs cannot exceed $5,000 + $1,000 catch-up contribution for the year.
Be aware of these limitations when you meet with your financial planner to review your retirement planning for the year. This is especially important if you participate in multiple employer-sponsored plans or contribute to more than one traditional/Roth IRA. Contributions in excess of these limits can result in excess contributions, which are subject to excise tax unless they are corrected in time.
by
Denise Appleby
Denise Appleby is founder and owner of Appleby Retirement Consulting,which provides technical consultation, content, coaching, writing, editing and training services on related topics.
With more than 14 years of experience in the IRA and defined-contribution plans fields, Appleby has held several senior retirement-plan related positions with Pershing LLC, which included vice president of plans products and services, retirement plans manager, trainer, training manager, compliance consultant, technical help desk manager and writer.
With more than 14 years of experience in the IRA and defined-contribution plans fields, Appleby has held several senior retirement-plan related positions with Pershing LLC, which included vice president of plans products and services, retirement plans manager, trainer, training manager, compliance consultant, technical help desk manager and writer.
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