Standard WK_ Federal Income Tax Reporter 2011 Internal Revenue Service Notice 2010-78 Dec 2 2010.pdf
Standard Federal Income Tax Reporter (2011), Notice 2010-78, (Dec. 2, 2010)
Click to open document in a browser Notice 2010-78, I.R.B. 2010-49, December 2, 2010. (2010(19) CCH 46,524.) [Code Sec. 25B] Retirement plans: Retirement savings contribution credit: Dollar limitations: Cost-of-living adjustments. Cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirementrelated provisions have been released by the IRS, effective January 1, 2011. The AGI phase-out ranges for the retirement savings contributions credit have increased slightly. The AGI limit for the saver's credit is $56,500 for joint filers, $42,375 for heads of household, and $28,250 for married individuals filing separately and single filers. Back references: 3838.03, 3838.07 and 3838.25. [Code Sec. 61] Retirement plans: Fringe benefit plans: Dollar limitations: Cost-of-living adjustments. Cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirementrelated provisions have been released by the IRS, effective January 1, 2011. The compensation amounts under Reg. 1.61-21(f)(5)(i) concerning the definition of "control employee" for fringe benefit valuation purposes remains unchanged at $95,000. The compensation amount under Reg. 1.61-21(f)(5)(iii) remains unchanged at $195,000. Back references: 5907.032, 5907.044 and 5907.27. [Code Sec. 219] Retirement plans: Individual retirement arrangements: Fringe benefit plans: Dollar limitations: Costof-living adjustments. Cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirementrelated provisions have been released by the IRS, effective January 1, 2011. The applicable dollar amount under Code Sec. 219(g)(3)(B)(i) used to determine the amount of reduction for the limitation on deductions for taxpayers who are active participants and for spouses who are not active participants in certain pension plans has been adjusted. The applicable amount for taxpayers filing a joint return is $90,000. If the taxpayer's spouse is not an active participant the applicable amount for the spouse is increased from $167,000 to $169,000. The applicable dollar amount for all other taxpayers, except for married taxpayers filing separately, remains unchanged at $56,000. Back reference: 12,662.01. [Code Sec. 401] Retirement plans: Individual retirement arrangements: Fringe benefit plans: Dollar limitations: Costof-living adjustments. Cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirement-related provisions have been released by the IRS, effective January 1, 2011. The annual compensation limit under Code Secs. 401(a)(17), 404(l), 408(k)(3)(C) and 408(k)(6)(D)(ii) remains unchanged at $245,000. The annual compensation limitation under Code Sec. 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed COLAs to the compensation limitation under the plan to be taken into account, remains unchanged at $360,000. Back references: 17,903.01, 17,903.025, 17,903.03, 17,903.105, 17,903.15, 18,112.0245, 18,112.0265, 18,112.036 and 18,112.048. [Code Sec. 402] Retirement plans: Individual retirement arrangements: Fringe benefit plans: Dollar limitations: Costof-living adjustments. Cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirementrelated provisions have been released by the IRS, effective January 1, 2011. The contribution limit for 2011 Wolters Kluwer. All rights reserved.
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WK_ Standard Federal Income Tax Reporter 2011 Internal Revenue Service Notice 2010-78 Dec 2 2010.pdf
Code Sec. 401(k), Code Sec. 403(b), Code Sec. 457(b) and the federal government Thrift Savings Plan remains unchanged at $16,500. For those aged 50 or over, the catch-up limit remains at $5,500. Back references: 18,221.01, 18,221.022, 18,221.10, 18,250.01, 18,250.021, 18,250.07, 18,282.0235 and 18,282.024. [Code Sec. 404] Retirement plans: Individual retirement arrangements: Fringe benefit plans: Dollar limitations: Costof-living adjustments. Cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirement-related provisions have been released by the IRS, effective January 1, 2011. The annual compensation limit under Code Sec. 404(l) remains unchanged at $245,000. Back references: 18,347.01, 18,347.025, 18,348.028, 18,348.107 and 18,349.022. [Code Sec. 408] Retirement plans: Individual retirement arrangements: Fringe benefit plans: Dollar limitations: Costof-living adjustments. Cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirementrelated provisions have been released by the IRS, effective January 1, 2011. The Code Sec. 408(k) (2)(C) compensation amount for simplified employee pension plans (SEPs) remains unchanged at $550, and the Code Sec. 408(p)(2)(E) limitation regarding SIMPLE retirement accounts remains unchanged at $11,500. The annual compensation limit under Code Sec. 408(k)(3)(C) remains unchanged at $245,000. Back references: 18,922.01, 18,922.0223, 18,922.0229, 18,922.023, 18,922.0231, 18,922.0248, 18,922.0249, 18,922.0253, 18,922.0254, 18,922.0264, 18,922.0282 and 18,922.1068. [Code Sec. 408A] Retirement plans: Individual retirement arrangements: Fringe benefit plans: Dollar limitations: Costof-living adjustments. Cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirementrelated provisions have been released by the IRS, effective January 1, 2011. The adjusted gross income limitation under Code Sec. 408A(c)(3)(C) for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow(er) is increased from $167,000 to $169,000. The adjusted gross income limitation for all other taxpayers (other than married taxpayers filing separate returns) is increased to $107,000. Back references: 18,930.022, 18,930.024 and 18,930.197. [Code Sec. 409] Retirement plans: Individual retirement arrangements: Fringe benefit plans: Dollar limitations: Costof-living adjustments. Cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirementrelated provisions have been released by the IRS, effective January 1, 2011. The dollar amount under Code Sec. 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan (ESOP) subject to a five-year distribution period remains unchanged at $985,000. The dollar amount used to determine the lengthening of the five-year distribution period remains unchanged at $195,000. Back references: 18,951.027, 18,951.03 and 18,951.20. [Code Sec. 414] Retirement plans: Individual retirement arrangements: Fringe benefit plans: Dollar limitations: Costof-living adjustments. Cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirementrelated provisions have been released by the IRS, effective January 1, 2011. The limitation used in the definition of highly compensated employee under Code Sec. 414(q)(1)(B) remains unchanged at $110,000. The dollar limitation under Code Sec. 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in Code Sec. 401(k)(11) or Code Sec. 408(p) for individuals aged 50 or over remains unchanged at $5,500. The limitation under Code Sec. 414(v)(2) 2011 Wolters Kluwer. All rights reserved.
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WK_ Standard Federal Income Tax Reporter 2011 Internal Revenue Service Notice 2010-78 Dec 2 2010.pdf
(B)(ii) for catch-up contributions to an applicable employer plan described in Code Sec. 401(k)(11) or Code Sec. 408(p) for individuals aged 50 or over remains unchanged at $2,500. Back references: 19,173.023, 19,173.026, 19,173.25 and 19,198.25. [Code Sec. 415] Retirement plans: Individual retirement arrangements: Fringe benefit plans: Dollar limitations: Costof-living adjustments. Cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirementrelated provisions have been released by the IRS, effective January 1, 2011. The maximum limitation for the Code Sec. 415(b)(1)(A) annual benefit for defined benefit plans remains unchanged at $195,000, while the Code Sec. 415(c)(1)(A) limitation for defined contribution plans remains unchanged for 2011 at $49,000. Also, for participants who separate from service during 2010, the Code Sec. 415(b)(1)(B) limitation is computed by multiplying the participant's compensation limit, as adjusted through 2010, by 1.0118. Back references: 19,218.022, 19,218.023, 19,218.0235, 19,218.03, 19,218.034 and 19,218.27. [Code Sec. 416] Retirement plans: Individual retirement arrangements: Fringe benefit plans: Dollar limitations: Costof-living adjustments. Cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirementrelated provisions have been released by the IRS, effective January 1, 2011. The dollar limitation under Code Sec. 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan remains unchanged at $160,000. Back reference: 19,253.024. [Code Sec. 457] Retirement plans: Individual retirement arrangements: Fringe benefit plans: Dollar limitations: adjustments. Costof-living Cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirementrelated provisions have been released by the IRS, effective January 1, 2011. The Code Sec. 457(e)(15) limitation on deferrals with respect to deferred compensation plans of state and local governments and tax-exempt organizations remains unchanged at $16,500. Back references: 21,536.035, 21,536.036, 21,536.0365, 21,536.037 and 21,536.07.
2011 Limitations Adjusted As Provided in Section 415(d), etc.
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Section 415 of the Internal Revenue Code (the Code) provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Commissioner annually adjust these limits for cost-of-living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under 415. Under 415(d), the adjustments are to be made pursuant to adjustment procedures which are similar to those used to adjust benefit amounts under 215(i)(2)(A) of the Social Security Act. The limitations that are adjusted by reference to 415(d) generally will remain unchanged for 2011. This is because the cost-of-living index for the quarter ended September 30, 2010, while greater than the cost-ofliving index for the quarter ended September 30, 2009, is less than the cost-of-living index for the quarter ended September 30, 2008, and, following the procedures under the Social Security Act for adjusting benefit amounts, any decline in the applicable index cannot result in a reduced limitation. For example, the limitation under 402(g)(1) on the exclusion for elective deferrals described in 402(g)(3) will be $16,500 for 2011, which is the same amount as for 2009 and 2010. This limitation affects elective deferrals to 401(k) plans, 403(b) plans, and to the Federal Government's Thrift Savings Plan, among other plans.
Cost-of-Living Adjusted Limits for 2011
Effective January 1, 2011, the limitation on the annual benefit under a defined benefit plan under 415(b) (1)(A) remains unchanged at $195,000. Pursuant to 1.415(d)-1(a)(2)(ii) of the Income Tax Regulations, the adjustment to the limitation under a defined benefit plan under 415(b)(1)(B) is determined using a 2011 Wolters Kluwer. All rights reserved.
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WK_ Standard Federal Income Tax Reporter 2011 Internal Revenue Service Notice 2010-78 Dec 2 2010.pdf
special rule that takes into account that the cost-of-living indexes for the quarter ended Sept. 30, 2009, and for the quarter ended Sept. 30, 2010, were both less than the cost-of-living index for the quarter ended Sept. 30, 2008, and that the cost-of-living index for the quarter ended Sept. 30, 2010, is greater than the cost-ofliving index for the quarter ended Sept. 30, 2009. For a participant who separated from service before Jan. 1, 2010, the participant's limitation under a defined benefit plan under 415(b)(1)(B) is unchanged (i.e., the adjustment factor is 1.0000). For a participant who separated from service during 2010, the limitation under a defined benefit plan under 415(b)(1)(B) for 2011 is computed by multiplying the participant's 2010 compensation limitation by 1.0118 in order to reflect changes in the cost-of-living index from the quarter ended Sept. 30, 2009, to the quarter ended Sept. 30, 2010. The limitation for defined contribution plans under 415(c)(1)(A) remains unchanged for 2011 at $49,000. The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of 415(b)(1)(A). After taking into account the applicable rounding rules, the amounts for 2011 are as follows: The limitation under 402(g)(1) on the exclusion for elective deferrals described in 402(g)(3) remains unchanged at $16,500. The annual compensation limit under 401(a)(17), 404(1), 408(k)(3)(C), and 408(k)(6)(D)(ii) remains unchanged at $245,000. The dollar limitation under 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan remains unchanged at $160,000. The dollar amount under 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5-year distribution period remains unchanged at $985,000, while the dollar amount used to determine the lengthening of the 5-year distribution period remains unchanged at $195,000. The limitation used in the definition of highly compensated employee under 414(q)(1)(B) remains unchanged at $110,000. The dollar limitation under 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in 401(k)(11) or 408(p) for individuals aged 50 or over remains unchanged at $5,500. The dollar limitation under 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in 401(k)(11) or 408(p) for individuals aged 50 or over remains unchanged at $2,500. The annual compensation limitation under 401(a)(17) 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 limitation under the plan under 401(a)(17) to be taken into account, remains unchanged at $360,000. The compensation amount under 408(k)(2)(C) regarding simplified employee pensions (SEPs) remains unchanged at $550. The limitation under 408(p)(2)(E) regarding SIMPLE retirement accounts remains unchanged at $11,500. The limitation on deferrals under 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations remains unchanged at $16,500. The compensation amounts under 1.61-21(f)(5)(i) of the Income Tax Regulations concerning the definition of "control employee" for fringe benefit valuation purposes remains unchanged at $95,000. The compensation amount under 1.61-21(f)(5)(iii) remains unchanged at $195,000. The Code also provides that several pension-related amounts are to be adjusted using the cost-of-living adjustment under 1(f)(3). After taking the applicable rounding rules into account, the amounts for 2011 are as follows: The adjusted gross income limitation under 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing a joint return is increased from $33,500 to $34,000; the limitation under 25B(b)(1)(B) is increased from $36,000 to $36, 500; and the limitation under 25B(b)(1)(C) and (D) is increased from $55,500 to $56,500. The adjusted gross income limitation under 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing as head of household is increased from $25,125 to $25,500; the
2011 Wolters Kluwer. All rights reserved.
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WK_ Standard Federal Income Tax Reporter 2011 Internal Revenue Service Notice 2010-78 Dec 2 2010.pdf
limitation under 25B(b)(1)(B) is increased from $27,000 to $27,375; and the limitation under 25B(b)(1)(C) and (D) is increased from $41,625 to $42,375. The adjusted gross income limitation under 25B(b)(1)(A) for determining the retirement savings contribution credit for all other taxpayers is increased from $16,750 to $17,000; the limitation under 25B(b) (1)(B) is increased from $18,000 to $18,250; and the limitation under 25B(b)()(C) and (D) is increased from $27,750 to $28,250. The deductible amount under 219(b)(5)(A) for an individual making qualified retirement contributions remains unchanged at $5,000. The applicable dollar amount under 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased from $89,000 to $90,000. The applicable dollar amount under 219(g)(3)(B)(ii) for all other taxpayers (other than married taxpayers filing separate returns) remains unchanged at $56,000. The applicable dollar amount under 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $167,000 to $169,000. The adjusted gross income limitation under 408A(c)(3)(C)(ii)(I) for determining the maximum Roth IRA contribution for taxpayers filing a joint return or as a qualifying widow(er) is increased from $167,000 to $169,000. The adjusted gross income limitation under 408A(c)(3)(C)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $105,000 to $107,000. The dollar amount under Section 430(c)(7)(D)(i)(II) used to determine excess employee compensation with respect to a single-employer defined benefit pension plan for which the special election under section 430(c) (2)(D) has been made is increased from $1,000,000 to $1,014,000.
Drafting Information
The principal author of this notice is John Heil of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding the data in this notice, please contact the Employee Plans' taxpayer assistance telephone service at 1-877-829-5500 (a toll-free call) between the hours of 8:30 a.m. and 4:30 p.m. Eastern time Monday through Friday. For information regarding the methodology used in arriving at the data in this notice, please e-mail Mr. Heil at [e-mail]. Footnotes 1 Based on News Release IR-2010-108 dated October 28, 2010.
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