January 15, 1993
IRS Announces 1993 Pension Plan Limitations
The Internal Revenue Service 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 Internal Revenue Code 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 January 1, 1993, the maximum
limitation for the annual benefit under section 415(b)(1)(A) for defined benefit plans is
increased from $112,221 to $115,641.
The limitation for defined contribution plans under section 415(c)(1)(A) remains at
$30,000 for 1993 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 limitation of section 415(b)(1)(A) is adjusted. These
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 $62,345 to $64,245.
- The limitation on the exclusion for elective deferrals under section 402(g)(1) is
increased from $8,728 to $8,994.
- 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
$124,690 to $128,490 and from $623,450 to $642,450.
- The threshold amount under section 4980A(c)(1) regarding excess distributions is
increased from $140,276 to $144,551.
- The limitations used in the definition of highly compensated employee under section
414(q) of $93,518 and $62,345 are respectively increased to $96,368 and $64,245.
- The annual compensation limit under sections 401(a)(17) and 404(l) of the code is
increased from $228,860 to $235,840.
- The compensation amount under section 408(k)(2)(C) regarding simplified employee pension
plans (SEPs) is increased from $374 to $385. The compensation amount under section
408(k)(3)(C) is increased from $228,860 to $235,840.
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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