As expected, many benefits-related limits will increase in 2009 from their 2008 levels due to inflation indexing. The same is true for dollar amounts relevant to Social Security and Medicare benefits. A printable version of our annual limits card is available <link=”//www.spencerfane.com/_FileLibrary/FileImage/2009%20Annual%20Benefit%20Plan%20Amounts.pdf”>here.
Benefit Plan Amounts
The annual limit on compensation a qualified retirement plan may consider for each participant will increase from $230,000 to $245,000. The maximum amount a defined benefit plan may annually pay to a participant will increase to from $185,000 to $195,000. Defined contribution plans, of course, have no limits on annual payouts, but the maximum annual additions to a participant’s accounts rises to $49,000 in 2009. Section 402(g)’s limit on elective deferrals by an employee will increase from $15,500 to $16,500. The maximum IRA deductible amount will remain $5,000.
The limit for IRA “catch-up contributions,” $1,000, will not increase in 2009. Employees age 50 or older who are eligible to make these contributions may contribute an additional $5,500 to their 401(k), 403(b), or governmental 457(b) plan.
The compensation threshold for identifying “highly compensated employees” will increase in 2009, from $105,000 to $110,000. The threshold at which an officer is deemed to be a “key employee,” will increase in 2009 from $150,000 to $160,000.
The maximum contribution to an HSA will increase from $2,900 to $3,000 for an individual, and from $5,800 to $5,950 for families. The minimum deductible for a qualifying high deductible health plan will increase from $1,100 to $1,150 for individual coverage, and from $2,200 to $2,300 for family coverage.
Social Security and Medicare Amounts
The Social Security cost of living adjustment in 2009 will be 5.8 percent. Individuals receiving Social Security retirement benefits prior to their Social Security retirement age may earn up to $14,160 in 2009 without reducing their benefit. If 2009 is the year an individual attains his or her Social Security retirement age, that individual may earn up to $3,140 per month without a benefit reduction. The wage base subject to Social Security taxes will increase from $102,000 to $106,800.
The Medicare Part A inpatient hospital deductible will rise from $1,024 to $1,068, while the Medicare Part B deductible will remain the same at $135.
The monthly premiums for Part B are divided into five brackets that range from $96.40 up to $308.30. For most unmarried beneficiaries, the cut-off point for the lowest premium is $82,000 of annual income, while those having annual income in excess of $213,000 will pay the highest rate. The income brackets can vary, however, based on marital status and other factors.