Important 2010 Year-End Notices for Qualified Retirement Plan Sponsors

Posted by Dana Thrasher on November 18, 2010

As we approach the end of 2010, we remind you to determine your need to provide certain required year-end notices, as the failure to provide required notices exposes a plan sponsor to fines from $110 to $1000 per day, depending on the notice violation. The list below describes those notices and indicates applicable due dates:

Safe Harbor Annual Notice (401(k) Plans): The notice must provide information about the safe harbor nonelective or matching contribution formula, as well as other important plan features. Safe harbor plans must provide the notice to participants and eligible employees at least 30 (but no more than 90) days prior to the beginning of each plan year (December 1 for calendar-year plans).

Qualified Default Investment Alternative (“QDIA”) Notice: This notice explains the QDIA rights and obligations, such as the situations in which a plan will invest a participant’s assets in the QDIA and the participant’s right to direct amounts in the QDIA into other investment options. All defined contribution plans with participant-directed investments must provide this notice to participants and eligible employees at least 30 days prior to the beginning of each plan year (by December 31 for calendar-year plans).

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IRS Announces Dollar Limits for 2011

Posted by Dana Thrasher on November 01, 2010

On October 28, 2010, the Internal Revenue Service announced the cost of living adjustments applicable to dollar limitations for pension plans for the 2011 tax year. The limitations for the 2011 tax year will remain at the 2010 limitation levels.  These dollar limitations affect, among other things, the maximum amount that an employee may be contribute to an employee on a pre-tax basis (402(g)), the amount of compensation that a plan may consider for plan purposes (401(a)(17)), and the compensation threshold a plan may use to determine highly compensated status (414(q)(1)(B)).  Below is a table showing both the limitations for the 2010 tax year and the limitations for the 2011 tax year.

Dollar Limitations

2011

2010

401(k) & 403(b) Elective Deferrals (IRC § 402(g)(1))

$16,500

$16,500

Catch-Up Elective Deferrals (IRC § 414(v)(2)(B)(i))

$5,500

$5,500

Defined Benefit Plan Benefit (IRC § 415(b)(1)(A))

$195,000

$195,000

Defined Contribution Plan Contribution (IRC § 415(c)((1)(A))

$49,000

$49,000

Annual Compensation Limit (IRC § 401(a)(17) and IRC § 404(l))

$245,000

$245,000

Special Compensation Limit for Government Plans

$360,000

$360,000

457(b) Deferral (IRC § 457(e)(15))

$16,500

$16,500

Highly Compensated Employee (IRC § 414(q)(1)(B))

$110,000

$110,000

Key Employee in Top-Heavy Compensation (IRC § 416(i)(1)(A)(i)

$160,000

$160,000

SIMPLE Plan Deferral (IRC § 408(p)(2)(E))

$11,500

$11,500

SIMPLE Plan  Catch-Up Elective Deferrals (IRC § 414(v)(2)(B)(iii))

$2,500

$2,500

SEP Coverage (IRC § 408(k)(2)(C))

$550

$550