Pension Plan Limits for 2008
November 2007
The contributions and benefits under qualified retirement plans are subject to certain annual limits. The annual limits are subject to an annual cost-of-living increase based on the increase in the Consumer Price Index (CPI). For most limitations, the increase in the CPI over the past year has caused an increase in the dollar limit. The IRS has announced the cost-of-living adjustments to dollar limitations for retirement plans for 2008. Here is a comparison of the 2007 and the new limits effective January 1, 2008:
| Limit | 2007 | 2008 |
| Compensation Limit | $225,000 | $230,000 |
| Defined Contribution §415 Limit | $45,000 | $46,000 |
| Defined Benefit §415 Limit | $180,000 | $185,000 |
| Key Employee Officer | $145,000 | $150,000 |
| Highly Compensated Employee | $100,000 | $105,000 |
| Governmental Plan Compensation Limit | $335,000 | $345,000 |
| ESOP §409(o) Limits | $915,000 $180,000 |
$935,000 $185,000 |
Elective Deferral and Catch-up Limits for 2008
The elective deferral and catch-up contribution limits did not change from 2007 to 2008.
| Limit | 2007 | 2008 |
| 401(k), 403(b), 457(b) Deferral Limit | $15,500 | $15,500 |
| 401(k), 403(b), governmental 457(b) Catch-up Limit | $ 5,000 | $ 5,000 |
| Simple Plan Deferral Limit | $10,500 | $10,500 |
| Simple Plan Catch-up Limit | $ 2,500 | $ 2,500 |
IRA Limits
For 2008, the limit for both traditional and Roth IRAs increases from $4,000 to $5,000. The limit that applies to IRA catch-up contributions (contributions for individuals age 50 and over) remains at $1,000.
Social Security Increases
The Social Security Administration announced an increase in the taxable wage base (TWB) for 2008 from $97,500 to $102,000. Workers pay Social Security tax on wages up to the TWB. Also, some retirement plan formulas are integrated with Social Security. These plans use the TWB when allocating contributions or calculating benefits.
