Cypen & Cypen
OCTOBER 17, 2008
Stephen H. Cypen, Esq., Editor
1. IRS ANNOUNCES PENSION PLAN LIMITATIONS FOR 2009:
On October 16, 2008 Internal Revenue Service issued IR-2008-118, announcing cost-of-living adjustments applicable to dollar limitations for pension plans and other items for Tax Year 2009. Effective January 1, 2009, the limitation on annual benefits of a defined benefit plan under Section 415 is increased from $185,000 to $195,000. Similarly, the limitation for defined contribution plans under Section 415 is increased from $46,000 to $49,000. And annual compensation limit under Section 401(a)(17) is increased from $230,000 to $245,000. Finally, the limitation on deferrals under Section 457 deferred compensation plans of state and local governments is increased from $15,500 to $16,500.
2. SOCIAL SECURITY WILL RISE 5.8%:
More than 55 million
Americans who receive Social Security will see a 5.8%
boost (about $63, on average) in their monthly checks
Up from a 2.3% increase last year, the latest increase
is the largest since a 7.4% rise in 1982. The increase
will first apply to December 2008 benefits payable in
January 2009. Increased payments to more than 7 million
Security Income beneficiaries will begin on December
31, 2008. Some other changes that take effect in January
each year are based on the increase in average wages.
Based on that increase, the maximum amount of earnings
to the Social Security tax (taxable maximum) will increase
to $106,800 from $102,000. Of the estimated 164 million
workers who will pay Social Security taxes in 2009, about
11 million will pay higher taxes as a result of the increase
in the taxable maximum.
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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.