January 24, 1991
TO: PENSION MEMBERS NO. 3-91
RE: 1991 COST OF LIVING ADJUSTMENTS
__________________________________________________________
The Internal Revenue Service recently released the cost of
living adjustments applicable to the dollar limitations on
benefits, the limit on employee salary reduction contributions to
a 401(k) plan and the definition of "highly compensated
employees". These amounts, under Section 415 and other sections
of the Internal Revenue Code are adjusted annually. (For 1990
adjustments, see Institute Memorandum to Pension Members No. 5-
90, dated February 9, 1990.)
The maximum amount a participant can contribute to a 401(k)
plan or SARSEP as an elective salary reduction was increased from
$7,979 in 1990 to $8,475 in 1991. The maximum limitation for the
annual benefit for defined benefit plans was increased from
$102,582 to $108,963; the defined contribution plan limit remains
at $30,000 and will not be changed until the defined benefit plan
limit exceeds $120,000. The limitations used in the definition
of "highly compensated employee" under section 414(q) of the
Internal Revenue Code of $85,485 and $56,990 in 1990 were
respectively increased to $90,803 and $60,535 for 1991.
A copy of Internal Revenue Service News Release IR-91-12 is
attached. We will keep you informed of further developments.
W. Richard Mason
Assistant General Counsel
Attachment