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Pension Plan Limitations for 2010

Pension Plan Limitations for 2010 By Kelly Twedell
Published November 23, 2009
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The Internal Revenue Service (IRS) has released the 2010 cost-of-living adjustments (COLAs) for IRAs and retirement plans. The IRS makes the adjustments according to specific formulas that include a comparison of cost-of-living figures. Most of the 2010 limitations remain unchanged due to a lower cost-of-living for the period of calculation in 2009 compared to 2008. According to the IRS, the IRA contribution limit and all related retirement plan limitations will not change for 2010. The only cost-of-living increases for 2010 are those associated with income limitations for Traditional IRA deductions, Roth IRA contributions, and the saver’s tax credit.

Traditional IRA Deduction Modified Adjusted Gross Income (MAGI) Ranges

For Traditional IRA deductions, the MAGI ranges for single active participants and spouses married to active participants were each increased by $1,000 for 2010. The 2010 MAGI ranges for Traditional IRA deductions are as follows.
  • Single active participant: $56,000-$66,000
  • Married active participant filing a joint income tax return: $89,000-$109,000
  • Married active participant filing a separate income tax return: $0-$10,000
  • Spouse of an active participant: $167,000-$177,000

Roth IRA Contribution MAGI Ranges

The only MAGI range for Roth IRA contribution eligibility that increased for 2010 is that for married individuals filing joint income tax returns. The 2010 MAGI ranges for Roth IRA contributions are as follows.
  • Single individual: $105,000-$120,000
  • Married individual filing a joint income tax return: $167,000-$177,000
  • Married individual filing a separate income tax return: $0-$10,000

Saver’s Tax Credit

Some, but not all, of the adjusted gross income limits associated with the saver’s income tax credit for IRA contributions and salary deferrals in retirement plans increased. Following are the 2010 saver’s credit income limitations.
2010 Adjusted Gross Income*Applicable
Percentage
Joint return Head of household All other cases
OverNot OverOverNot OverOverNot Over
$33,500$25,125$16,75050
$33,500$36,000$25,125$27,000$16,750$18,00020
$36,000$55,500$27,000$41,625$18,000$27,75010
$55,500$41,625$27,7500

Unchanged Limitations

The unchanged limitations for 2010 include:
  • Traditional and Roth IRA contribution limit under IRC Sec. 219(b)(1)(A): $5,000
  • Traditional and Roth IRA catch-up contribution under IRC Sec. 219(b)(5)(B) (not subject to COLAs): $1,000
  • Annual additions under IRC Sec. 415(c)(1)(A) for defined contribution plans: $49,000
  • Annual additions under IRC Sec. 415(b)(1)(A) for defined benefit pension plans: $195,000
  • Annual deferral limit for 401(k), 403(b) and 457(b) plans (“402(g) limit”): $16,500
  • Catch-up contributions to 401(k), 403(b) and 457(b) plans: $5,500
  • Annual deferral limit for SIMPLE IRA and SIMPLE 401(k) plans: $11,500
  • Catch-up contributions for SIMPLE IRA and SIMPLE 401(k) plans: $2,500
  • IRC Sec. 401(a)(17) compensation cap: $245,000
  • Highly compensated employee definition income threshold: $110,000
  • Top-heavy determination key employee definition income threshold: $160,000
  • SEP plan employee income threshold for benefit eligibility: $550
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