Magazine article The National Public Accountant

Pension Plan Limitations

Magazine article The National Public Accountant

Pension Plan Limitations

Article excerpt

Q. What are the pension plan limitations for 2001?

A. IRS issued IR-2000-82 with the cost-of-living increases, as man-dated by Section 415 of the IRC.

Effective January 1, 2001, the limitation on the annual benefit under a defined benefit plan in Section 415(b)(1)(A) has increased from $135,000 to $140,000. For participants who separated from service before January 1, 2001, the limitation for defined benefit plans under Section 415(b)(1)(B) is computed by multiplying the participant's compensation limitation, as adjusted through 2000, by 1.0351.

The limitation for defined contribution plans under Section 415(b)(l)(A) has been increased from $30,000 to $35,000.

The limitation under Section 402(g)(1) on the exclusion for elective deferrals, described in Section 402(g)(S), remains unchanged at $10,500. This limitation affects elective deferrals to 401(k) plans and to the federal government's Thrift Savings Plan, among other plans.

The dollar amount under Section 409 (o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5-year distribution period has been increased from $755,000 to $780,000. The dollar amount used to determine the lengthening of the 5-year distribution period has been increased from $150,000 to $155,000.

The limitation used to define a highly compensated employee, under Section 414 (q)(1)(B), remains unchanged at $85,000.

The annual compensation limit under Sections 401(a)(17) and 404(1) remains unchanged at $170,000. …

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