Vision Payroll

October 26, 2008

IRS Announces Increase in 2009 SEP Compensation Limitation

In IR-2008-118, the Internal Revenue Service (IRS) announced an increase for 2009 to the compensation limitation for Simplified Employee Pension (SEP) plans. Under §408(k)(2) of the Internal Revenue Code of 1986, SEP contributions are generally required for any employee of an employer with a SEP plan who has attained age 21, has performed service for the employer during at least three of the immediately preceding five years, and received at least a certain level of “compensation” from the employer for the year. For 2009, the compensation limit will increase to $550 from $500 in 2008. Contact Vision Payroll if you have questions on changes to the 2009 SEP Compensation Limitation or visit our Important Facts and Figures page for further information.

October 25, 2008

IRS Announces Increase in 2009 Highly Compensated Employee Limitation

In IR-2008-118, the Internal Revenue Service (IRS) announced an increase for 2009 to the Highly Compensated Employee Limitation under §414(q)(1)(B) of the Internal Revenue Code of 1986. Non-discrimination testing in some types of retirement plans limits the deferral rate of “highly compensated employees” (HCEs) based upon the deferral rate (ADP) of the “non-highly compensated employees”. For 2009, an HCE is anyone who was a “5-percent owner” at any time during 2008 or 2009 or anyone who received in excess of $105,000 in compensation during 2008 and, if elected by the employer, is in the top twenty percent of employees based upon compensation. The HCE limit was $100,000 for 2007 and 2008 plan testing. Since the law includes a look-back provision, employees who earned more than $100,000 in 2007 are generally considered HCEs for 2008 plan year testing, employees who will earn more than $105,000 in 2008 are generally considered HCEs for 2009 plan year testing, and employees who will earn more than $110,000 in 2009 are generally considered HCEs for 2010 plan year testing. Contact Vision Payroll if you have questions on changes to the HCE definition for 2008 and 2009, visit Important Facts and Figures, or get updated information for 2009 and 2010.

October 21, 2008

IRS Announces Increase in 2009 Retirement Plan Contribution and Compensation Limitations

In IR-2008-118, the Internal Revenue Service (IRS) announced an increase for 2009 in the compensation limitation from $230,000 to $245,000 under §401(a)(17), §404(l), §408(k)(3)(C), and §408(k)(6)(D)(ii) of the Internal Revenue Code of 1986 (IRC). The contribution limit under IRC §415(c)(1)(A) for defined contribution plans also increased from $46,000 to $49,000. This limit does not include the age 50 and over catch-up contribution when applicable, thereby increasing the total limitation for eligible taxpayers in qualifying plans from $51,000 to $54,500. Contact Vision Payroll if you have questions on changes to the 2009 Retirement Plan Contribution and Compensation Limitations.

October 20, 2008

IRS Announces Increases to 401(k), 403(b), and 457(e)(15) Deferral Limits for 2009

In IR-2008-118, the Internal Revenue Service (IRS) announced increases to the limits on deferral contributions for 2009 under §401(k), §403(b), and §457(e)(15). These limitations are codified in those sections of the Internal Revenue Code of 1986 (IRC). Under IRC §415, the Commissioner of the IRS is required to adjust the plan limitations to keep pace with inflation. For 2009, the deferral contribution limitation will increase from $15,500 for 2008 to $16,500 for 2009. The age 50 and over catch-up contribution will also increase from $5,000 for 2008 to $5,500 for 2009 for individuals who plan to reach age 50 before the end of 2009. Contact Vision Payroll if you have questions on changes to these deferral contribution limits.

October 19, 2008

IRS Announces Increases to SIMPLE Plan Limits for 2009

In IR-2008-118, the Internal Revenue Service (IRS) announced increases to the limits on SIMPLE plan contributions for 2009. The limitation for SIMPLE plans is codified in §408(p)(2)(E) of the Internal Revenue Code of 1986 (IRC). This section also requires annual adjustments as necessary to keep pace with inflation in a manner similar to that required by IRC §415 for retirement plans. For 2009, the SIMPLE plan regular limitation will increase from $10,500 for 2008 to $11,500 for 2009. The age 50 and over catch-up contribution remains at $2,500 for individuals who plan to reach age 50 before the end of 2009. Contact Vision Payroll if you have questions on changes to the SIMPLE plan contribution limits.

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