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Annual Benefit Limit

Last Updated September 28, 2012

Definition

The annual benefit limit for defined benefit plans is the lesser of:

A) 100% of the participant's average compensation for his or her highest 3 consecutive calendar years
B) The dollar limit that is in effect for the year

Definition

The annual benefit limit for defined benefit plans is the lesser of:

A) 100% of the participant's average compensation for his or her highest 3 consecutive calendar years
B) The dollar limit that is in effect for the year

Year

2008

2007

2006

2005

2004

2003

2002

Limit

$185,000

180,000

175,000

170,000

165,000

160,000

160,000

        
 

2009

 2010 2011 2012   
 

$195,000

 $195,000 $195,000 $200,000   

 

Referring Cite

IRC § 415(b)(1)(A) and IRC § 415(c)(1)(A), Treas Reg §1.415(c)-1

 

Additional Helpful Information

  • Contributions to a defined benefit plan are based on what is needed to provide definitely determinable benefits to plan participants. Actuarial assumptions and computations are required to figure these contributions. Generally, you will need continuing professional help to have a defined benefit plan.
  • Forfeitures under a defined benefit plan cannot be used to increase the benefits any employee would otherwise receive under the plan. Forfeitures must be used instead to reduce employer contributions.