IRS Benefit and Contribution Limits for Retirement Plans

Considering the country’s current budget deficit crisis and given such factors as the formation of a so-called “Super Committee” charged with identifying reductions over the next ten years, it is inevitable that the tax deductibility of contributions to qualified retirement plans will come under the scrutiny of legislators.  One such proposal recently considered by the Joint Select Committee on Deficit Reduction was known as the “20-20 proposal” and would have limited Annual employer and employee retirement plan contributions to 20 percent of compensation or $20,000 whichever is lower.  

According to the American Benefits Council (“Benefits Byte” – October 17, 2011), “Such measures would depress retirement savings for workers at all income levels, placing additional long-term burdens on federal safety nets such as Social Security.”

In the end, “20-20” did not pass and the cost of living adjustments for the 2012 Tax Year recently announced by the Internal Revenue Service (www.irs.gov) are listed in the chart below.

In today’s challenging times, it’s important to recognize that even if these new contribution limits are currently out of your reach, it still pays to contribute as much as you can afford to now.  Even lower amounts help you to reach your retirement goals sooner.  If you haven’t started a retirement plan yet, make 2012 the year you begin one!

The Members Retirement Program, administered by AXA Equitable, is committed to keeping costs low while delivering comprehensive service that includes keeping plan sponsors in compliance with legislative changes impacting their retirement plan.  To learn more please call 800-523-1125, ext. #5985 or visit www.axa-equitable.com/mrp.

The Members Retirement Program (Contract form #6059) is funded by a group variable annuity contract issued and distributed by AXA Equitable Life Insurance Company, NY, NY;  GE-66288(a) (12/11)