January 17, 1991
IRS Announces 1991 Pension Plan Limitations
WASHINGTON - The IRS today announced cost-of-living
adjustments applicable to dollar limitations on benefits under qualified defined benefit
pension plans and to other provisions affecting such plans.
Section 415 of the IRC provides for dollar limitations on benefits and contributions
under these plans. It also requires that the Commissioner annually adjust these limits for
cost-of- living increases. Effective Jan. 1, 1991, the maximum limitation for defined
benefit plans is increased from $102,582 to $108,963.
The limitation for defined contribution plans under section 415(c)(1)(A) remains at
$30,000 for 1991 since the law provides that it shall not be changed until the section
415(b)(1)(A) limit for benefits exceeds $120,000.
The Code provides that various other dollar amounts are to be adjusted at the same time
and in the same manner as the dollar amounts and the adjusted amounts are as follows:
- The special limitation for qualified police or firefighters under section 415(b)(2)(G)
is increased from $56,990 to $60,535.
- The limitation on the exclusion for elective deferrals under section 402(g)(1) is
increased from $7,979 to $8,475.
- The dollar amounts under section 409(o)(1)(C)(ii) for lengthening the distribution
period of that section for tax credit employee stock ownership plans are increased from
$113,980 to $121,070 and from $569,000 to $605,350.
- The threshold amount under section 4980A(c)(1) regarding excess distributions is
increased from $128,228 to $136,204.
- The limitations used in the definition of highly compensated employee under section
414(q) of $85,485 and $56,990 are respectively increased to $90,803 and $60,535.
- The annual compensation amount under section 408(K)(2)(C) regarding simplified employee
pension plans (SEPs) is increased from $342 to $363. The compensation amount under section
408(k)(3)(C) is increased from $209,200 to $222,220.
Administrators of defined benefit or defined contribution plans that have received
favorable determination letters should not request new determination letters solely
because of yearly amendments to adjust maximum limitations in the plans.
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