IRS News Release IR 99-80
Pension Plan Limitations For Tax Year 2000
WASHINGTON -- The Internal Revenue Service today announced cost-of-
living adjustments applicable to dollar limitations for pension
plans and other items for Tax Year 2000.
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.
Effective January 1, 2000, the limitation on the annual benefit
under a defined benefit plan under section 415(b)(1)(A) is
increased from $130,000 to $135,000. For participants who separated
from service before January 1, 2000, the limitation for defined
benefit plans under section 415(b)(1)(B) is computed by multiplying
the participant's compensation limitation, as adjusted through
1999, by 1.0235.
The limitation for defined contribution plans under section 415(c)
(1)(A) remains unchanged at $30,000.
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).
These dollar amounts and the adjusted amounts are as follows:
- The limitation under section 402(g)(1) on the exclusion for
elective deferrals described in section 402(g)(3) is increased
from $10,000 to $10,500.
- The dollar amount under section 409(o)(1)(C)(ii) for
determining the maximum account balance in an employee stock
ownership plan subject to a 5-year distribution period is
increased from $735,000 to $755,000, while the dollar amount
used to determine the lengthening of the 5-year distribution
period is increased from $145,000 to $150,000.
- The limitation used in the definition of highly compensated
employee under section 414(q)(1)(B) is increased from $80,000
to $85,000.
- The annual compensation limit under sections 401(a)(17) and
404(l) is increased from $160,000 to $170,000. The annual
compensation limitation under section 401(a)(17) for eligible
participants in certain governmental plans that, under the
plan as in effect on July 1, 1993, allowed cost-of-living
adjustments to the compensation limitation under the plan
under section 401(a)(17) to be taken into account, is
increased from $270,000 to $275,000.
- The compensation amount under section 408(k)(2)(C) regarding
simplified employee pensions (SEPs) is increased from $400 to
$450. The compensation amount under section 408(k)(3)(C) for
SEPs is increased from $160,000 to $170,000.
- The limitation under section 408(p)(2)(A) regarding simple
retirement accounts remains unchanged at $6,000.
- The limitation on deferrals under sections 457(b)(2) and (c)
(1) concerning deferred compensation plans of state and local
governments and tax-exempt organizations remains unchanged at
$8,000.
- The compensation amounts under sections 1.61-21(f)(5)(i) and
(iii) of the Income Tax Regulations concerning the definition
of "control employee" for fringe benefit valuation purposes
are increased from $70,000 and $145,000, respectively, to
$75,000 and $150,000, respectively.
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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