Annual Salary Deferral and Catchup Limits
Year |
401(k), 403(b), 457 salary deferral Limit |
401(k), 403(b), 457 Catch-up (age 50 and over) |
SIMPLE 401(k)/IRA limit |
SIMPLE Catchup (age 50 and over) |
IRA Limit/IRA Catchup |
2006 |
$15,000 |
$5,000 |
$10,000 |
$2,500 |
$4,000/1,000 |
2007 |
$15,500 |
$5,000 |
$10,500 |
$2,500 |
$4,000/1,000 |
2008 |
$15,500 |
$5,000 |
$10,500 |
$2,500 |
$5,000/1,000 |
2009 |
$16,500 |
$5,500 |
$11,500 |
$2,500 |
$5,000/1,000 |
2010/2011 |
$16,500 |
$5,500 |
$11,500 |
$2,500 |
$5,000/1,000 |
Other Annual Limits
|
2009 |
2010/2011 |
Annual limit on contributions to an employee’s account (excluding catchup): |
$49,000 |
$49,000 |
Annual limit on contributions to an employee’s account (including catchup): |
$54,500 |
$54,500 |
Annual limit on compensation considered under a retirement plan: |
$245,000 |
$245,000 |
Annual limit on benefit provided through a defined benefit plan at age 65: |
$195,000 |
$195,000 |
Highly Compensated salary limit (highly compensated in succeeding year) |
$110,000 |
$110,000 |
Department of Labor Rules Regarding
Deposit of Employee Contributions and Loan Payments
Department of Labor rules state that a company must deposit contributions withheld from an employee’s paycheck to the plan’s trust no later than the earliest date on which the contributions can be segregated from the employer’s assets. For plans with over 100 participants, the DOL has generally interpreted this provision as three to five working days after the payroll date. For plans with less than 100 participants, the DOL recently announced that contributions deposited within seven (7) working days after the paycheck date will be considered timely. The Department of Labor vigorously enforces the required deposit date calculated from the payroll date, as described above.
The Department of Labor extends the deposit rules to loan repayments withheld from employee’s paychecks. Such repayments must be deposited to the plan’s trust following the same deposit rules for contributions. Employer matching contributions are not subject to these deposit rules.
Late deposit of employee contributions and loan payments constitutes a prohibited loan to the employer, upon which the employer must pay interest to the trust. The employer must also pay a 15% penalty tax to the IRS, which is based on the interest owed to the plan, and file Form 5330 to pay this penalty.