SunGard Relius

The IRS has announced the cost-of-living adjustments applicable to dollar limitations for pension plans and other items for tax year 2010. The dollar limits that apply to qualified plans (and the 403(b) and 457(b) plan deferral limits) remain unchanged from 2009. Recently, practitioners had speculated whether any of the dollar limits actually would decrease for 2010, since the cost-of-living index for the quarter ended September 30, 2009, is less than the cost-of-living index for the quarter ended September 30, 2008. However, the IRS interpreted the applicable statutory provision (Code §415(d)) to mean that any decline in the applicable index cannot result in a reduced limitation. The following table summarizes the key dollar limits.

A few of the many indexed numbers under the Internal Revenue Code have increased, since different indexing rules apply for different purposes. Notably: (1) the applicable dollar amount for determining the deductible IRA contribution amount for taxpayers (other than married filing separate returns) who are active participants in a certain retirement plans (Code §219(g)(3)(B)(ii)) increases from $55,000 to $56,000; (2) the applicable dollar amount for a taxpayer (not an active participant) whose spouse is an active participant (Code §219(g)(7)(A)) increases from $166,000 to $167,000; and (3) the adjusted gross income limitation for determining the maximum Roth IRA contribution for married taxpayers filing a joint return (or for a qualifying widow(er)) (Code §408A(c)(3)(C)(ii)(I)) increased from $166,000 to $167,000.

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