Contribution Limits Remain Unchanged in 2011

Employees saving for their retirement through Pre-Tax retirement benefits  are not getting any favors from the government this year. The contribution limits for the major employer-sponsored retirement plans:

403(b)s, 457(b)s and 401(k)s, not get an increase. That means like in 2010, the 2011 limit remains $16,500 for those under age 50.

Those who are age 50 and older get the benefit of a catch-up contribution of an additional $5,500.

While this may not seem like a big deal if you don’t max out your contribution anyway, you have to wonder why. They say there isn’t enough inflation to warrant an increase, yet everywhere we look prices are rising. Not only that, but politicians remind us regularly that as a whole we aren’t saving enough and have problems with Social Security, yet no new incentives are ever put in place to encourage people to save more.

The 15-Year Rule
Additionally there is a 15-Year Rule that can increase your yearly 403b contribution.To qualify for this additional contribution, you must have at least 15 years of service with your qualifying employer. Your additional 403b contribution under the 15 Year Rule can be as much as
$3,000.00 per year".

 

Type of contribution Limitations	2011
Elective Deferrals 403(b) and 401(k) and; not including adjustments and catch-ups)	$16,500
457(b)(2) and 457(c)(1) Limits (not including catch-ups)	$16,500
Section 414(v) Catch-Up Deferrals to 403(b), 457(b), 401(k), or SARSEP Plans 9/	$5,500
Defined Benefit Plans	$195,000
Defined Contribution Plans	$49,000
Annual Compensation Limit	$245,000
Annual Compensation Limit for Grandfathered Participants in Governmental Plans Which Followed 401(a)(17) Limits (With Indexing) on July 1, 1993	$360,000
Highly Compensated Employee ("HCEs")	$110,000
Individual Retirement Accounts ("IRAs"), for individuals 49 and below	$5,000
Individual Retirement Accounts ("IRAs"), for individuals 50 and above	$6,000
SIMPLE Retirement Accounts	$11,500
SEP Coverage	$550
SEP Compensation	$245,000
Tax Credit ESOP Maximum Balance	$985,000
Amount for Lengthening of 5-Year ESOP Period	$195,000
Excess Distribution Threshold	N/A
Qualified Police and Firefighters' DB Benefit Limit	N/A
Income Subject to Social Security Tax	$106,800
FICA Tax for employers	7.65%
FICA Tax for employees	5.65%
Social Security Tax for employers	6.2%
Social Security Tax for employees	4.2%
Medicare Tax for employees and employers	1.45%
FICA Tax for self-employed workers	13.3%
Social Security Tax for self-employed workers	10.4%
Medicare Tax for self-employed workers	2.9%

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