Compliance October 16, 2008

SSA Bumps Up Social Security Withholding Limit

The maximum amount of earnings subject to Social Security tax starting in January 2009 will be increased to $106,800 from $102,000, the Social Security Administration (SSA) announced Thursday.
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According to an SSA news release, about 11 million will pay higher taxes as a result of the increase in the taxable maximum of the estimated 164 million workers who will pay Social Security taxes in 2009.

The SSA also announced that monthly Social Security and Supplemental Security Income benefits for more than 55 million Americans will increase 5.8% in 2009. The cost of living adjustment (COLA) is the largest since 1982.

The 5.8% COLA begins with benefits that more than 50 million Social Security beneficiaries receive in January 2009. Increased payments to more than 7 million Supplemental Security Income beneficiaries will begin on December 31, the SSA said.

Also Thursday, The Internal Revenue Service (IRS) announced an increase in contribution limits for defined contribution plans for 2009 (see IRS Hikes DC, Catch-Up Limits).

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