IRS Announces Retirement Plan COLA Adjustments for 2009

On October 16, 2008, the Internal Revenue Service issued IR 2008-118, announcing the cost-of-living adjustments applicable to retirement plan limits for 2009. Most of the limits increase for 2009, as the increase in the cost-of-living index met the statutory threshold that triggers the adjustment. A summary of the current 2008 limits and the new 2009 limits follows:

Retirement Plan Limits




Maximum Elective Deferral Limit Under 402(g)
(applicable to 401(k), 403(b) and 457(b) Plans)



SIMPLE Plan Salary Deferral Limit (408(p))



Maximum Catch-Up Contribution Limit Under 414(v)
(Plans other than SIMPLE Plans)



Maximum Catch-Up Contribution Limit Under 401(k)(11) and 408(p)



Defined Benefit Plan - 415 Annual Benefit Limit



Defined Benefit Plan Compensation Multiplier—for participants who separated from service prior to January 1, 2009



Defined Contribution Plan - 415 Annual Addition Limit



Annual Compensation Limit Under 401(a)(17), 404(l) and 408(k)



Special Annual Compensation Limit for Governmental Plans in effect on July 1, 1993



Highly Compensated Employee Definition (414(q))



Key Employees (416 Top Heavy Compensation for Officers)



Maximum ESOP Account Balance Subject to Five-Year Distribution Period



ESOP Dollar Amount used to determine the lengthening of the Five-Year Distribution Period



Social Security Wage Base

The Social Security Administration also announced on October 16, 2008 a $4,800 increase in the wage base for computing the Social Security tax (OASDI) for 2009 ( The increase of $4,800 raises the Social Security tax wage base from $102,000 in 2008 to $106,800 in 2009.

J. René Toadvine is a Shareholder in Littler Mendelson's Charlotte office. If you would like further information, please contact your Littler attorney at 1.888.Littler,, or Mr. Toadvine at

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.