February 9, 1990
TO: PENSION MEMBERS NO. 5-90
RE: COST-OF-LIVING ADJUSTMENTS TO SECTION 415 AND RELATED
LIMITATIONS
__________________________________________________________
Attached is a copy of IRS News Release 90-15, which
provides for cost-of-living adjustments to the limitations under
section 415 of the Code and related limitations, effective
January 1, 1990.
The maximum limitation for defined benefit plans under
section 415 has increased from $98,064 to $102,582. There is no
corresponding increase with respect to the $30,000 limitation for
defined contribution plans, because that figure cannot be
adjusted until the limitation for defined benefit plans exceeds
$120,000.
In addition, the release increases the maximum amount of
elective deferrals under a 401(k) plan or a salary reduction
simplified employee pension (SEP) from $7,627 to $7,979 per year.
The threshold amount for purposes of the excise tax on excess
distributions from retirement plans under section 4980A has
increased from $122,580 to $128,228.
Certain dollar limitations applicable to SEPs have also
increased. Under section 408(k)(2)(C), a SEP may now exclude
those employees with less than $342 of compensation. The
compensation amount under section 408(k)(3)(C) has increased from
$200,000 to $209,200.
We will keep you informed of further developments.
Kathy D. Ireland
Associate General Counsel
Attachment