IRS Announced 2012 Inflation-Adjusted Benefit Limits

by | Jan 9, 2012 | HR Legislative Updates

The Internal Revenue Service has announced cost-of-living adjustments applicable to dollar limitations for retirement plans and other benefits for 2012. This marks the first notable adjustment to the limits since 2009.

  2011 Limits 2012 Limits
401(k)/403(b)Contributions1 $16,500 $17,000
457(b) Limit $16,500 $17,000
Catch-up Contributions (50+ years old) $5,500 $5,500

Compensation Limit2
(calculating contributions for DCPlan)

 $245,500 $250,000
Highly Compensated Employees2 $110,000 $115,000

Key Employee Officer Compensation2
for non-discrimination testing purposes)

 $160,000 $165,000

Maximum Annual Benefit Funded
Defined Benefit Plan2

 $195,000 $200,000

Maximum Annual Contribution

Defined Contribution Plan2
(employer/employee combined)

 $49,000 $50,000

ESOP Limits
Dollar limit for determining lengthening
of 5-year period1

 $195,000 $200,000

Dollar amount for determining max.
amount subject to 5-year distribution1

  $985,000  $1,015,000
Maximum SIMPLE Contribution
  $11,500  $11,500
FICA Wage Base3  $106,800  $110,100

Qualified Transportation Fringe Benefits
Code §132

Monthly limit for transportation in a commuter
highway vehicle or transit pass4

 $230  $125
Monthly limit for qualified parking  $230 $240
Monthly limit for bicycle commuters   $20  $20
 Adoption Assistance Programs5  
Maximum excludable from employee gross income  $13,360  N/A

Exclusion phased out with modified gross income
(starting at–ending at)

 $185,210

$225,210

  N/A
Health Savings Accounts

High deductible health plan (HDHP)
Minimum annual deductible
Individual Coverage  $1,200  $1,200
Family Coverage  $2,400  $2,400

HSA monthly contribution
1/12 lesser of annual deductible or statutory limit
 Self-only Coverage Limit  $3,050  $3,100
 Family Coverage Limit  $6,150  $6,250
 Catch-up contributions (age 55 or older)  $1,000  $1,000
  1. Calendar year limitation
  2. For plan years beginning in the calendar year.
  3. Calendar year limitation for FICA withholding purposes and for plan years beginning in the calendar year for retirement plan purposes.
  4. The American Recovery and Reinvestment Act temporarily raised the public transit limit to $230 through 2011. Absent congressional action, the limit will revert to $125 in 2012.
  5. The Adoption Assistance Credit, originally set to expire in 2009, was extended through 2011 by the Patient Protection and Affordable Care Act. Absent congressional action, the credit will no longer be available for the 2012 tax year.

Reference: Gehring, J. & Conley, B. (2011). Seyfarth Shaw Law Offices.