With Little Change in IRS Retirement Plan Limits, Ample Room Still to be Creative with Executive Deferred Compensation Plans

The Internal Revenue Service just announced the cost of living adjustments applicable to dollar limitations for pension plans for the 2013 tax year.  These dollar limitations affect, among other things, the maximum amount that may be contributed by an employee on a pre-tax basis (402(g)), the amount of compensation that may be considered for plan purposes 401(a)(17)), and the compensation threshold used to determine highly compensated status (414(q)(1)(B)).  Below is a table showing both the limitations for the 2012 tax year and the limitations for the 2013 tax year.  With little movement in retirement plan amounts, there remain many opportunities for an employer to design creative non-qualified deferred compensation plans for its executives.

Dollar Limitations



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



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



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



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



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



457(b) Deferral (IRC § 457(e)(15))



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



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



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



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



SEP Coverage (IRC § 408(k)(2)(C))





























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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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