Maximum Benefit Contributions Limit for 2001-2011

As Published by the Internal Revenue Service
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2011

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2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

Elective Deferrals (401k & 403b plans)

$16,500

$16,500

$16,500

$15,500

$15,500

$15,000

$14,000

$13,000

$12,000

$11,000

$10,500

Annual Benefit Limit

$195,000

$195,000

$195,000

$185,000

$180,000

$175,000

$170,000

$165,000

$160,000

$160,000

$140,000

Annual Contribution Limit

$49,000

$49,000

$49,000

$46,000

$45,000

$44,000

$42,000

$41,000

$40,000

$40,000

$35,000

Annual Compensation Limit

$245,000

$245,000

$245,000

$230,000

$225,000

$220,000

$210,000

$205,000

$200,000

$200,000

$170,000

457 Deferral Limit

$16,500

$16,500

$16,500

$15,500

$15,500

$15,000

$14,000

$13,000

$12,000

$11,000

$18,500

Highly Compensated Threshold

$110,000

$110,000

$110,000

$105,000

$100,000

$100,000

$95,000

$90,000

$90,000

$90,000

$85,000

SIMPLE Contribution Limit

$11,500

$11,500

$11,500

$10,500

$10,500

$10,000

$10,000

$9,000

$8,000

$7,000

$6,500

SEP Coverage

$550

$550

$550

$500

$500

$450

$450

$450

$450

$450

$450

SEP Compensation Limit

$245,000

$245,000

$245,000

$230,000

$225,000

$220,000

$210,000

$205,000

$200,000

$200,000

$170,000

Income Subject to Social Security

$106,800

$106,800

$106,800

$102,000

$97,500

$94,200

$90,000

$87,900

$87,000

$84,900

$80,400

Top-Heavy Plan Key Employee Comp

$160,000

$160,000

$160,000

$150,000

$145,000

$140,000

$135,000

$130,000

$130,000

$130,000

n/a

Catch-Up Contributions

$5,500

$5,500

$5,500

$5,000

$5,000

$5,000

$4,000

$3,000

$2,000

$1,000

n/a

SIMPLE Catch-Up Contributions

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,000

$1,500

$1,000

$500

n/a

 

The Elective Deferral Limit is the maximum contribution that can be made on a pre-tax basis to a 401(k) or 403(b) plan (Internal Revenue Code section 402(g)(1)). Some still refer to this as the $7,000 limit (its original setting in 1987).

The 457 Deferral Limit is a similar restriction, applied to certain government plans (457 plans).

The Annual Benefit Limit is the maximum annual benefit that can be paid to a participant (IRC section 415). The limit applied is actually the lessor of the dollar limit above or 100% of the participant's average compensation (generally the high three consecutive years of service). The participant compensation level is also subjected to the Annual Compensation Limit noted above.

The Annual Contribution Limit is the maximum annual contribution amount that can be made to a participant's account (IRC section 415). This limit is actually expressed as the lessor of the dollar limit or 100% of the participant's compensation, applied to the combination of employee contributions, employer contributions and forfeitures allocated to a participant's account. This limit was increased for the first time since its inception last year.

In calculating contribution allocations, a plan cannot consider any employee compensation in excess of the Annual Compensation Limit (401(a)(17)). This limit is also imposed in determining the Annual Benefit Limit (above). In calculating certain nondiscrimination tests (such as the Actual Deferral Percentage), all participant compensation is limited to this amount, for purposes of the calculation.

The Highly Compensated Threshold (section 414(q)(1)(B)) is the minimum compensation level established to determine highly compensated employees for purposes of nondiscrimination testing.

The SIMPLE Contribution Limit is the maximum annual contribution that can be made to a SIMPLE (Savings Incentive Match Plan for Employees) plan. SIMPLE plans are simplified retirement plans for small businesses that allow employees to make elective contributions, while requiring employers to make matching or nonelective contributions.

SEP Coverage Limit is the minimum earnings level for a self-employed individual to qualify for coverage by a Simplified Employee Pension plan (a special individual retirement account to which the employer makes direct tax-deductible contributions.

The SEP Compensation Limit is applied in determining the maximum contributions made to the plan.

Catch up Contributions, SIMPLE "Catch up" deferral: Under the Economic Growth and Tax Relief Act of 2001 (EGTRRA), certain individuals aged 50 or over can now make so-called 'catch up' contributions, in addition to the above limits.

EGTRRA also added the Top-heavy plan key employee compensation limit.

International Funds Shine in 2010

The global mutual fund industry is on pace for $850 billion in net inflows to stock and bond mutual funds in 2010, according to Strategic Insight (SI), an Asset International company.

An SI news release said more than half of those flows are estimated to end up in funds domiciled outside the U.S. That is likely to fall just short of the $890 billion that went into stock and bond funds worldwide in 2009, but ahead of the net outflows from such long-term funds in 2008 and net inflows of around $800 billion in each of 2006 and 2007.

According to SI, those figures mark a strong resumption of fund investing around the world after the paralysis-induced shocks of 2008.

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“The fact that long-term mutual funds are drawing more inflows post-crisis than pre-crisis is not surprising,” commented Avi Nachmany, Strategic Insight’s Director of Research, in the news release. “The global financial crisis underscored the value of mutual funds’ liquidity, transparency and accessibility. And, post-crisis, fund providers have been introducing more flexible and global funds, as well as more holistic “solutions” to meet evolving investors’ demands. Thanks to these trends, there is rising acceptance of the mutual fund around the world as the savings vehicle of choice.”

The SI report indicated that more than 60% of long-term fund flows are going into bond funds, including short- and intermediate-duration bond funds that appeal to investors seeking higher yields than those available in bank deposits or money-market funds. Some fund buyers are also seeking out bond funds as a way to participate in financial markets without taking on equity risk, as investors continue to be weighed down by concerns about economic growth, especially in the U.S., and about debt problems, especially in Europe.

In the U.S., Strategic Insight expects 2010 full-year flows to stock and bond funds to hit $400 billion, including ETFs and funds underlying VAs. That would be just the second time in history that long-term fund flows topped $400 billion, besides last year’s record of more than $500 billion in long-term fund flows in the U.S.

Flows into bond funds – including ETFs – are on pace to top $300 billion for all of 2010, crossing the $300 billion mark for just the second time.

In October, U.S. investors put $30 billion into bond and stock funds. This included just over $22 billion into bond funds, and roughly $7.5 billion into stock funds (including $10 billion into international and global equity funds, and $2.5 billion net redeemed from domestic equity funds).

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