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IRS Announces Plan Limits for 2011

Last Updated February 14, 2011

 

by Denise Appleby CISP, CRC, CRPS, CRSP, APA

 
The IRS issued IR-2010-108 , in which they provide retirement plan limits for 2011.  Many of the limits remain unchanged from those in effect for 2010. The following are the highlights.
 
Savers Credit
A nonrefundable savers tax credit is available to eligible individuals who make contributions to their traditional IRAs and/or Roth IRAs, as well as to those who make  salary deferral contributions to an employer sponsored retirement plan.  This saver’s credit is capped at $1,000, and the percentage for which the individual is eligible depends on his/her adjusted gross income (AGI). For an explanation of the saver's credit and how it works, see The Saver’s Credit- an Often Overlooked Retirement Savings Benefit:
 
The following are the AGI limits and the credit rate percentage for which individuals are eligible.
2010 Thresholds (c) www.deniseappleby.com
Credit Rate
Married and files a joint return
Files as head of household
Other category of filers
 
Over
Not Over
Over
Not Over
Over
Not Over
50%
$0.00
$33,500
$0.00
$25,125
$0.00
$16,750
20%
$33,500
$36,000
$25,125
$27,000
$16,750
$18,000
10%
$36,000
$55,500
$27,000
$41,625
$18,000
$27,750
0%
$55,500
 
$41,625
 
$27,750
 
 
 
2011 Thresholds (c) www.deniseappleby.com
Credit Rate
Married and files a joint return
Files as head of household
Other category of filers
 
Over
Not Over
Over
Not Over
Over
Not Over
50%
$0.00
$34,000
$0.00
$25,500
$0.00
$17,000
20%
$34,000
$36,500
$25,500
$27,375
$17,000
$18,250
10%
$36,500
$56,500
$27,375
$42,375
$18,250
$28,250
0%
$56,500
 
$42,375
 
$28,250
 
 
 
Roth IRA Contributions Eligibility Limits
Individuals may contribute to a Roth IRA only if their MAGI does not exceed a certain amount. The limits are as follows:
 
Tax Filing Status
2011 MAGI
2010 MAGI
Allowed contribution 
Single
$107,000 or less
$105,000 or less
100%
$107,000  - $122,000
$105,000  - $120,000
Partial
$122,000  or more
$120,000  or more
None
Married filing jointly
$169,000 or less
$167,000 or less
100%
$169,000 -$179,000
$167,000- $177,000
Partial
$179,000 or more
$177,000 or more
None
Married filing separately
Less than $10,000
Less than $10,000
Partial
$10,000 or more
$10,000 or more
None
 
Traditional IRA Deductibility
Individuals who are active participants are eligible to deduct their traditional IRA contributions, only if their MAGI amounts do not exceed certain limits. For details on how this works, see the article Active Participant Status–Can You Deduct Your IRA Contribution?
 
The MAGI that applies to each tax-filing status is as follows:
Tax Filing Status
2011 MAGI
2010 MAGI
Allowed deduction
Single
$56,000 or less
$56,000 or less
100%
$56,000 - $66,000
$56,000 - $66,000
Partial
$66,000 or more
$66,000 or more
None
Married filing jointly or a qualifying widower, and active
$90,000 or less
$89,000 or less
100%
$90,000- $110,000
$89,000- $109,000
Partial
$110,000 or more
$109,000 or more
None
Married filing jointly. Not active, but spouse is active
$169,000 or less
$167,000 or less
100%
$169,000 - $179,000
$167,000-$177,000
Partial
$179,000 or more
$177,000 or more
None
Married filing separately
Less than $10,000
Less than $10,000
Partial
$10,000 or more
$10,000 or more
None
 
The following IRA and employer plan limits were also announced.
 
Item
2011 Limit
2010 Limit
Comments ((c) www.deniseappleby.com)
IRA Contribution limit for traditional and Roth IRA
$5,000
$5,000
The maximum amount that an individual can contribute to an IRA for the year is 100% of eligible compensation or $5,000, whichever is less. This can be contributed to either a traditional IRA or a Roth IRA, or split between both. The aggregate amount cannot exceed $5,000.
Catch-up contribution limit for traditional and Roth IRAs
$1,000
$1,000
Individuals who are at least age 50 by the end of the year can make an additional IRA contribution of $1,000. This is referred to as a catch-up contribution. The $1,000 can be a contribution to a traditional IRA or Roth IRA, or split between both. The aggregate amount cannot exceed $1,000.
Salary deferral contributions to plans such as 401(k), federal thrift savings (TSP) , or 403(b) plan.
$16,500
$16,500
Maximum amount of salary deferral contributions that can be made by an individual for the year. This is a ‘per individual’ limit. Therefore, regardless of the number of 401(k), thrift savings plan, SIMPLE IRA, SIMPLE 401(k) or 403(b) plans in which the individual participates, the aggregate salary deferral contributions for the year cannot exceed $16,500 + catch-up contributions for 2009 or 2010
Salary deferral contributions to 457(b) plans
$16,500
$16,500
Maximum amount of salary deferral contribution that can be made to a 457(b) plan. If someone participates in a 457(b) plan and also participates in a 403(b) plan [for example], he/she could make salary deferral contributions of up to $16,500 to each (total $33,000) + catch-up for 2009 or 2010.
SIMPLE IRA Salary deferral
$11,500
$11,500
Maximum amount of salary deferral contributions that can be made to a SIMPLE IRA for the year
SIMPLE 401(k) Salary deferral
$11,500
$11,500
Maximum amount of salary deferral contributions that can be made to a SIMPLE 401(k) for the year
Catch-up contribution to 401(k) and 403(b) plans
$5,500
$5,500
Maximum amount of catch-up contributions that can be made for the year. This does not include catch-up contributions made to 457(b) plans
Catch-up contribution to 457(b) plans
$5,500
$5,500
Maximum amount of catch-up contributions that can be made to a 457(b) plan.
Catch-up contribution limit for SIMPLE IRAs
$2,500
$2,500
Maximum amount of catch-up contributions that can be made to a SIMPLE IRA for the year
Catch-up contribution limit for SIMPLE 401(k) plans
$2,500
$2,500
Maximum amount of catch-up contributions that can be made to a SIMPLE 401(k) for the year
$49,000
$49,000
Maximum dollar amount that can be added to a participant’s account for the year. This applies on a per-employer basis. Therefore, if an individual works for two separate employers, that individual could receive $49,000 to each plan (total $98,000 + catch-up for 2009 or 2010. For this to be possible, the employers must not be part of a controlled group or affiliated service group.
$195,000
$195,000
Maximum benefit payable annually in the form of a straight life annuity under a defined benefit plan
$245,000
$245,000
The maximum amount of compensation that can be taken into account when computing plan contributions and benefits. For SIMPLE IRAs, this cap applies only to non-elective contributions.
Minimum SEP compensation
$550
$550
Employees who earn at least $550 must share in SEP contributions for the year, providing they meet the other eligibility requirements 
Dollar limitation for defining a key employee
$160,000
$160,000
A plan is considered to be top-heavy if more than 60% of assets under the plan are owned by key-employees
Dollar limitation for defining highly compensated employee (HCE)
$110,000
$110,000
Nondiscrimination testing is required to be performed for qualified plans to ensure benefits are not discriminately skewed in favor of highly compensated employees
Maximum account balance in an ESOP under Section 409(o)(1)(C)(ii)
$985,000
$985,000
The dollar amount for determining the maximum account balance in an ESOP subject to a 5 ‑year distribution period
Maximum dollar amount in an ESOP under Section 409(o)(1)(C)(ii)
$195,000
$195,000
The dollar amount under Section 409(o)(1)(C)(ii) used to determine the lengthening of the 5 ‑year distribution in an ESOP
Annual compensation limit under Section 401(a)(17) for eligible participants in certain governmental plans
$360,000
$360,000
The annual compensation limitation for eligible participants in certain grandfathered governmental plans remains unchanged
 
 
No Plan Amendment Required for New Limits
Administrators of defined benefit or defined contribution plans who have received favorable determination letters should not request new determination letters solely because of yearly amendments to adjust maximum limitations of the plans.