The Internal Revenue Service has announced rates applicable to dollar limitations on benefits and contributions.  Because inflation remains low, most dollar limitations on employee benefits remain at the 2009 levels.

Compensation.  The compensation limit for determining benefits under qualified retirement plans remains at $245,000 in 2010.

Annual Addition Limitations.  The annual benefit limitation for defined benefit plans under Section 415 of the Code is $195,000 in 2010, which has not changed.  The annual addition limitation for defined contribution plans remains at $49,000 in 2010.

401(k) Plan Limitations.  The annual salary deferral limitation for 401(k) contributions stays at $16,500 in 2010.  The "catch-up" contribution limitations for 401(k) participants 50 years of age or older is still $5,500 in 2010.

Key Employee Definitions.  The limitation in officer compensation for the definition of key employees remains at $160,000 in 2010.

Highly Compensated Employee Definition.  The compensation limitation for determining which participants in a qualified plan are highly compensated employees is still $110,000 in 2010.

Qualified Transportation Fringe Benefits.  The monthly transit pass exclusion and qualified parking exclusion in 2010 are at the 2009 level of $230 per month.  The Bicycle Commuting Benefit excludes from income a maximum amount of $20 per month for each month in a 12-month period that the employee anticipates commuting to work by bicycle.

Health Savings Account.  The health savings account limits did increase for 2010.  For 2010, the minimum deductible amounts for High Deductible Health Plans ("HDHP") are not less than $1,200 for self-only coverage or $2,400 for family coverage and the maximum annual out-of-pocket expenses for an HDHP may not exceed $5,950 for self-only coverage or $11,900 for family coverage.  The maximum contribution limits for 2010 for health savings accounts for individuals participating in an HDHP are $3,050 for self-only coverage and $6,150 for family coverage.  Additionally, there is an annual $1,000 "catch-up" contribution that employees over the age of 55 years old may make.

If you have any questions concerning dollar limitations contained in the Internal Revenue Code, or any other issues regarding qualified or non-qualified retirement plans, please contact Paul Altman at (312) 261-2105 or Paul Simons at (312) 261-2156.

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