Compliance December 12, 2001

IRS Publishes 2002 Plan Limits

December 12, 2001 (PLANSPONSOR.com) - The Internal Revenue Service (IRS) has released the official retirement plan limitations for tax year 2002, including the impact of the Economic Growth and Tax Relief Act of 2001 (EGTRRA), as well as cost-of-living adjustments.
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According to the IRS, effective for limitation years ending after December 31, 2001, the following limits apply:

Contribution Limits

  • 401(k) elective deferrals: $11,000 (increased from $10,500 by EGTRRA)
  • SIMPLE employee deferrals:  $7,000 (increased from $6,500 by EGTRRA)
  • 403(b) deferrals:  $11,000 (increased from $10,500 by EGTRRA)
  • 457 deferrals:  $11,000 (increased from $8,500 by EGTRRA)
  • Annual contributions to a defined contribution plan:  $40,000 (increased from $35,000 by EGTRRA).

However, the IRS notes that the limitation for defined contribution plans with non-calendar limitation years beginning before January 1, 2002, and ending after December 31, 2001, remains unchanged at $35,000.

Catching Up

Under EGTRRA certain individuals aged 50 or over can now make so-called ‘catch up’ contributions, in addition to the above limits.  Those new limits are:

  • Catch up Contributions:  $1,000 (added by EGTRRA)
  • SIMPLE “Catch up” deferral:  $500 (added by EGTRRA)

Annual benefit under a defined benefit plan:  $160,000 (increased from $140,000 by EGTRRA)

Compensation Limits

With regard to the determination of:

  • Annual compensation limit:  $200,000 (increased from $170,000 by EGTRRA)
  • Top-heavy plan key employee compensation limit: $130,000 (added by EGTRRA)
  • Tax Credit ESOP Maximum Balance:  $800,000 (increased from $780,000)
  • Highly Compensated Employee (HCE) compensation:  $90,000 (increased from $85,000)
  • SEP Compensation coverage:  $450 (unchanged).

– Nevin Adams                editors@plansponsor.com

For a table of the most important limits, go here

For more on the EGTRRA Limits go here

The IRS notice is at http://ftp.fedworld.gov/pub/irs-news/ir01-115.pdf


 

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