Annual Addition

AAA

DEFINITION of 'Annual Addition'

The total dollar amount contributed in a given year to a participant's retirement account under a defined-contribution plan. An annual addition is the sum of employer contributions, employee contributions and forfeitures in a particular year. The annual addition is subject to a maximum limit. This annual addition limit is the lesser of 100% of the participant's compensation for the year or the dollar limit in effect for the year. The annual addition dollar limit was fixed at $49,000 for each year from 2009 to 2011.

INVESTOPEDIA EXPLAINS 'Annual Addition'

Certain amounts credited to a participant's plan are not considered as annual additions. These include "catch-up" contributions, rollover contributions and loan repayments. In addition, employee contributions transferred from a qualified plan to a defined contribution plan do not count towards the annual addition.

RELATED TERMS
  1. Elective-Deferral Contribution

    A contribution arrangement of an employer-sponsored retirement ...
  2. 401(k) Plan

    A qualified plan established by employers to which eligible employees ...
  3. Matching Contribution

    A type of contribution an employer chooses to make to his or ...
  4. Qualified Retirement Plan

    A plan that meets requirements of the Internal Revenue Code and ...
  5. Defined-Benefit Plan

    An employer-sponsored retirement plan where employee benefits ...
  6. Defined-Contribution Plan

    A retirement plan in which a certain amount or percentage of ...
Related Articles
  1. Taxes

    New Retirement Plan Limits For 2011

  2. Taxes

    Common Questions About Retirement Plans ...

  3. Taxes

    The 401(k) and Qualified Plans Tutorial

  4. Financial worries can make employees less productive at work. As a result, the employee was no longer producing quality work and they might get fired.
    Savings

    Are Financial Worries Affecting Your ...

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center