New Limits for the year 2000

[Tom Poje]

Comp limits, deferral limits, etc. are all tied into the CPI-U (Consumer Price Index)

The numerator is:The average of the values for the three month period July, Aug, and Sept.

The denominator is the three month average Oct/Nov/Dec 1993 which was 145.7667

You multiply this value by your original limit (e.g. $150,000) to obtain the new limit. The comp limit only increases in increments of 10,000, the deferral limit in increments of $500, the 30,000 limit in increments of 5000.

You can obtain the CPI-U by calling (415) 975-4567 ---follow the instructions and enter code 2110. Its all computerized, you talk to no one, you eventually enter your fax #. (you will also get a CPI-W report - don't know what that is for.)

The value for March was 165.0. therefore, if that figure remains constant the rest of the year you have:

(165.0 / 145.7667) * $150,000 = $169,791

In other words, an early guess says next year the comp limit will probably be 170,000 because chances are that the index will continue to go up.

(unless Congress changes the rules again!)

The value for April should be out by now, I challenge someone to go out and grab it and report their findings!

[Kathy]

Cool! Thanks for the info!!

[Tom Poje]

well, the cpi for May has been released...no change from April...it stands at 166.2

assuming the value remains constant for the next 4 months (or at least assuming it won't drop) the following are the 'estimates' for next year:

166.2 / 145.7667 = 1.14+

comp limit

150,000 ==> 171,026 use 170,000

db limit

120,000 ==> 136,821 use 135,000

our favorite limit

30,000 ==> 34,205 still stuck at30,000

(maybe next year)

deferral limit

9240 ==> 10,535 use 10,500

hce limit

80,000 ==> 91,214

if I understand the rules correctly, this means to be an HCE will now take 90,000. but since that applies to the prior year, does that mean 90,000 in 1999?

anyway, all the above is based on my understanding of how things work.

in addition to the prior message on how to obtain the CPI, you can search the WEB under consumer price index as well.