IRS Addresses New Pension Plan Dollar Limitations

Washington, DC, December 13, 2001 - The Internal Revenue Service has issued a news release concerning pension plan limitations that become effective January 1, 2002 under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) as well as certain cost-of-living adjustments not affected by EGTRRA.

The news release first discusses the limitations reset or established by EGTRRA. Regarding the increase in the dollar limitation for defined contribution plans from $35,000 to $40,000, the news release notes that the limitation for defined contribution plans with noncalendar limitation years beginning before January 1, 2002 and ending after December 31, 2001 remains unchanged at $35,000.

The limitations not affected by EGTRRA include:

  • one used in the definition of highly compensated employee under section 414(q)(1)(B), which increases from $85,000 to $90,000; and
  • the simplified employee pension (SEP) compensation amount under section 408(k)(2)(C), which remains unchanged at $450.

  

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