The IRS and the Social Security Administration have announced the cost-of-living adjustments for various benefit plan limits for 2012. Limits affecting retirement plans are shown directly below and the limits for health and certain other fringe benefit plans are shown on the following page.

Retirement Plan Limits

The IRS updated the retirement plan limits effective for the plan year that begins on or after January 1, 2012. Unlike 2011, most limits received a cost-of-living adjustment in 2012. The 2012 limits, as well as the 2011 limits, are as follows:

2011

2012

Maximum Elective Deferrals to §401(k), §403(b), and §457(b) Plans

$16,500

$17,000

Maximum Catch-up Elective Deferrals to Plans other than SIMPLE Plans (age 50 by the end of the year)

$5,500

$5,500

Section 415 Limits
- Defined Contribution Plan Annual Addition Maximum
- Defined Benefit Plan Dollar Maximum
- Defined Benefit Plan Compensation Multiplier used to
    determine limit for participants who separated from service –
                    After December 31, 2009
                    Prior to January 1, 2010


$49,000
$195,000


1.0118
1.0000


$50,000
$200,000


1.0376
1.0327

Annual Compensation Limit under §§401(a)(17), 404(l) and 408(k)
Special limit for Governmental Plans in effect on July 1, 1993

$245,000

$360,000

$250,000

$375,000

§414(q) Highly Compensated Employee definition

$110,000

$115,000

§416(i) Top-Heavy Compensation – Used to determine officers as key employees


$160,000


$165,000

§409(o) Maximum ESOP Account Balance Subject to 5-Year Distribution Period


$985,000


$1,015,000

ESOP Amount Used to Determine Extensions of the 5-Year Distribution Period


$195,000


$200,000

SIMPLE Plans
Qualified Salary Reduction Limit under §408(p)
§§401(k)(11) and 408(p) Catch-up Contributions (age 50 by end of year)


$11,500

$2,500


$11,500

$2,500

§408A Maximum Roth IRA Contribution (AGI Limit)
Married Filing Joint Return or Qualifying Widower
All other Taxpayers (other than married filing separately)


$169,000
$107,000


$173,000
$110,000

Social Security Tax and Wage Base

For calendar year 2012, the Social Security taxable wage base increases to $110,100 (up from $106,800 in 2011).  The employer portion of the Social Security tax remains unchanged at 6.2%.  With respect to the employee portion of the Social Security tax, H.R. 3765 extends the rate of 4.2% that applied for 2011 through February 29, 2012.  Congress and the President are currently working on a full year extension.  The new “two-month” extension also imposes a “recapture” rule to those employees who receive more than $18,350 in wages during the two-month period.  The additional income tax on those higher-income employees is an amount equal to 2% of the amount of wages they receive during the two-month period that is in excess of $18,350 but not greater than the annual limit of $110,100.

Health and Fringe Benefit Plan Limits

The Service has also released health and fringe benefit plan adjustments effective January 1, 2012. The 2012 limits, as well as the 2011 limits, are as follows:

2011

2012

Health Savings Accounts – HDHP Limits (§223(c)(2)(A))
HDHP Minimum Annual Deductible – Self Only
HDHP Minimum Annual Deductible – Family
HDHP Out-of-Pocket Maximum – Self Only
HDHP Out-of-Pocket Maximum – Family


$1,200
$2,400
$5,950
$11,900


$1,200
$2,400
$6,050
$12,100

Health Savings Accounts – Maximum Contribution Limits (§223(b))
Self Only
Family
Catch-Up Contributions (age 55 by the end of the year)


$3,050
$6,150
$1,000


$3,100
$6,250
$1,000

Medical Savings Accounts – Health Plan Limits (§220(c)(2)(A))
Annual Deductible – Self Only
Annual Deductible – Family
Out-of-Pocket Maximum – Self Only
Out-of-Pocket Maximum – Family


$2,050 to $3,050
$4,100 to $6,150
$4,100
$7,500


$2,100 to $3,150
$4,200 to $6,300
$4,200
$7,650

Medical Savings Accounts – Maximum Contribution Limits (§220(b)(2))
Self Only (65% of deductible)
Family (75% of deductible)


$1,300 to $1,950
$3,037 to $4,537


$1,365 to $2,047
$3,150 to $4,725

Transportation Fringe Benefits – Monthly Limits (§132(f)(2))
Parking
Transit Passes and Vanpooling (combined)*


$230
$230


$240
$125

Employer Adoption Assistance Exclusion (§137)
Maximum Gross Income Exclusion**
Modified AGI Phase-out – Start
Modified AGI Phase-out – End


$13,360
$185,210
$225,210


$12,650
$189,710
$229,710

* The temporary increase in the transit pass limit expires at the end of 2011. Pending bills in Congress would extend the higher limit for 2012, but no agreement has been reached. (The extension for 2011 occurred in December 2010.)
** The temporary increase in the maximum adoption assistance exclusion expires at the end of 2011.

Knowledge Center

Match our knowledge to your needs

GOING THE DISTANCE

GOING THE DISTANCE

Walked, ran, and biked 1700+ miles for charity in 2016.