IRS Announces 1991 Pension Plan Limitations

WASHINGTON - 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, 1992, the maximum limitation for the annual benefit under section 415(b)(1)(A) for defined benefit plans in increased from $108.963 to $112,221.

The limitation for defined contribution plans under section 415(c)(1)(A) remains at $30,000 for 1992 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 $60,535 to $62,345.

The limitation on the exclusion for elective deferrals under section 402(g)(1) is increased from $8,475 to $8,728.

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 $121,070 to $124,690 and from $605,350 to $623,450.

The threshold amount under section 4980A(c)(1) regarding excess distributions is increased from $136,204 to $140,276.

The limitations used in the definition of highly compensated employee under section 414(q) of $90,803 and $60,535 are respectively increased to $93,518 and $62,345.

The annual compensation limit under sections 401(a)(17) and 404(1) of the Code is increased from $222,220 to $228,860.

The compensation amount under section 408(k)(2)(C) regarding simplified employee pension plans (SEPs) is increased from $363 to $374. The compensation amount under section 408(k)(3)(C) is increased from $222,220 to $228,860.

Administrators of defined benefit or defined contribution plans that have received favorable determination letters solely because of yearly amendments to adjust maximum limitations in the plans.

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