Benefit Strategies

Sec. 415 Limit for Defined-Benefit Plans (Sec. 415(b)(1)(A))

Maximum yearly benefit allowed is the lesser of 100% of the highest 3 years’ compensation or the indicated figure. Reductions apply for plans with pre-62 retirement ages and for participants with fewer than 10 years of service.

*This amount will be indexed in $5,000 increments when applicable.

Sec. 415 Limit for Defined-Contribution Plans (Sec. 415(c)(1)(A))

Maximum annual addition is the lesser of these numbers.

*This amount will be indexed in $1,000 increments when applicable.

Annual Limit on Includible Compensation (Sec. 401(a)(17))

Maximum compensation that can be taken into account when determining an individual contribution or benefit.

*This amount will be indexed in $5,000 increments when applicable.

Highly Compensated Employee (Sec. 414(q)(1)(B))

A person who earns over the indicated limits in the prior year and who is in the top 20% of employees (if elected) is a highly compensated employee.

*This amount will be indexed in $5,000 increments when applicable.

Key Employee (Sec. 416(i)(1)(A)(i))

An employee is considered a key employee if, during the prior year, the employee was (1) an officer with compensation in excess of the listed figure, (2) a 5% owner, or (3) a 1% owner with compensation in excess of $150,000. The law limits the number of officers treated as key employees. The family ownership attribution rule applies in determining whether an individual is a 5% owner of the employer for purposes of the top-heavy rules.

*This amount will be indexed in $5,000 increments when applicable.

Elective Deferrals for a 401(k) Plan or SARSEP (Sec. 402(g)(1))

The indicated figure is the maximum salary reduction that a participant can make under Sec. 402(g)(1).

*This amount will be indexed when applicable.

401(k) Catch-up Provision (Sec. 414(v)(2)(B)(i))

Individuals aged 50 and older by the end of the year would be allowed to make annual catch-up contributions to a 401(k) plan. The catch up for 2009 is a $5,500 increase over the traditional 401(k) amounts. The list represents the total amount of salary deferral possible for this cohort.

*Inflation adjustments may be made in $500 increments when applicable.

Elective Deferrals for a 403(b) Plan (Secs. 403(b) and 402(g)(1))

The indicated figure is the maximum salary reduction that a participant can make under a 403(b) plan.

*This amount will be indexed when applicable.

403(b) Supplemental Catch-up Provision (Sec. 414(v)(2)(B)(i))

In 2009, in addition to the catch-up provisions now available for 403(b) plans, an individual aged 50 or older by the end of the year would be allowed to make an annual supplemental catch-up contribution of $5,500 to the 403(b) plan.

The list represents the total amount of salary deferral possible for this cohort.

*Inflation adjustments may be made in $500 increments when applicable.

Elective Deferrals for a SIMPLE (Sec. 408(p)(2)(E))

The figure is the maximum salary reduction that a participant can make under a SIMPLE or 401(k) SIMPLE.

*Inflation adjustments may be made in $500 increments.

SIMPLE Catch-up Provision (Sec. 414(v)(2)(B)(ii))

Individuals aged 50 and older by the end of the year would be allowed to make annual catch-up contributions to a SIMPLE plan. The catch up for 2009 is a $2,500 increase over the traditional SIMPLE amounts. The list represents the total amount of salary deferral possible for this cohort.

*Inflation adjustments may be made in $500 increments when applicable.

Part-Time Employee Limitation for a SEP (Sec. 408(k)(2)(C))

Employees who earn over the indicated limits must be included in a SEP if they are otherwise eligible.

*Inflation adjustments may be made in $50 increments when applicable.

457 Limitation (Sec. 457(e)(15))

Nonqualified plan for state and local government and tax-exempt organizations.

*Inflation adjustments will be made in $500 increments when applicable.

Note: The limit is twice the otherwise applicable dollar limit in the three years prior to retirement.

Deductible, Nondeductible, and Roth IRA Contribution Limits (Secs. 219(b)(1)(A) and 408(a)(1))

These are the limitations on how much can be contributed to the IRA.

*Indexed for inflation in $500 increments when applicable.

IRA Catch-up Provision for Individuals 50 or Older by Year End (Sec. 219(a)(5)(B))

The amount that can be contributed for those 50 or older by year end.

The catch up is $1,000 in 2008 and subsequent years. The listed number is the total amount that can be contributed for this cohort. The catch-up limit of $1,000 will not be adjusted for cost of living increases under current law.

Traditional IRA Phaseout Modified Adjusted Gross Income Limitations (Sec. 219(g)(3)(B))

Roth IRA Modified Adjusted Gross Income Limits (Sec. 408A(c)(3)(C))

Taxable Wage Base

This is the maximum amount of covered earnings on which Social Security OASDI taxes are paid.

Medicare Wage Base

This is the maximum amount of coverage earnings on which Social Security hospital insurance taxes are paid.

Social Security Reduction for Postretirement Earnings (Under Full Retirement Age)

If earnings exceed the stated limit, Social Security recipients will lose $1 in Social Security benefits for every $2 earned in excess of the limit each year.

Modified Test That Applies for the Year an Individual Reaches Full Retirement Age

Applies only to earnings for months prior to attaining full retirement age. Signed into law as the Senior Citizen’s Freedom to Work Act; $1 reduction per $3 over the limit.

Medicare: Part B Monthly Premium

This is the amount of monthly premium that must be paid for coverage under Part B of Medicare. The monthly premium represents only about 25% of the costs of the benefits provided. In 2009 Medicare Part B enrollees with higher incomes ($85,000 single, $170,000 MFJ) will pay higher premiums based on the extent their income exceeds the threshold Part B premium.

The premium could be $134.90, $192.70, $250.50, or $308.30; see below.

Medicare: Part A Monthly Premium

This is the amount of monthly premium for Medicare Part A hospital insurance for those retirees who are not eligible for this benefit without charge and have less than 30 quarters with coverage. People with 30-39 quarters of coverage pay $244 in 2009.

Social Security Quarterly Earnings

The amount needed to be earned to receive a quarter of Social Security coverage. Forty quarters are needed for coverage under the system.

Social Security Benefits Cost-of-Living Increase

Amount that Social Security recipients’ checks will increase based on CPI-W.

Part A Deductible

Deductible is for the first 60 days in a benefit period.

Part A Coinsurance

From the 61st to the 90th day in each benefit period.

Part A Coinsurance

For the 60 lifetime reserve days.

Part A Skilled Nursing Facility

Per diem from the 21st to the 100th day.