COLA Increases for Dollar Limitations on Benefits and Contributions
The maximum amount an employee can contribute to a 401(k) plan is determined annually. You may be allowed catch up contributions in addition to annual limit, if you are age 50 or older. Refer to "Elective Deferrals" in Publication 525, Taxable and Nontaxable Income.
The maximum amount applies to an employee's aggregate pre-tax contributions to a 401(k) plan and 403(b) plan. There are several different limits that apply to a 401(k) plan in addition to the overall contribution limit. These limits, your salary, and the type of 401(k) plan to which you are contributing may limit your 401(k) contributions to a lesser amount.
2008 Plan Limits
- IRS 2008 Inflation Adjustments [IR-2007-172]
- Rev. Proc. 2007-66 - cost-of-living adjustments for 2008.
- 2008 Pension Plan Limitations [IR-2007-171]
- IRS Guidance on Backloading in Pension Plans
- COLA Increases for 2008 - Dollar Limitations on Benefits and Contributions.
Pension Plan Limitations for 2008
The Internal Revenue Service announced cost of living adjustments applicable to dollar limitations for pension plans and other items for Tax Year 2007 in IR-2007-171, October 18, 2007.
Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. It also requires that the Commissioner annually adjust these limits for cost of living increases.
Many of the pension plan limitations change for 2008. For most of the limitations, the increase in the cost-of-living index met the statutory thresholds...