The Internal Revenue Service has issued Revenue Ruling 2020-2 with the table of covered compensation for the 2018 plan year.
The revenue ruling provides tables of covered compensation under Section 401(l)(5)(E) of the Internal Revenue Code to be used for determining contributions to defined benefit (DB) plans and permitted disparity in defined contribution (DC) plan contributions.
To determine 2020 plan year covered compensation, the taxable wage base is $137,700. Permitted disparity allows for larger contributions or benefits with respect to compensation in excess of the Social Security wage base.
In determining an employee’s covered compensation for a plan year, the taxable wage base for the plan year is the taxable wage base in effect as of the beginning of the period.
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