We have just been announced with the adjustments for the cost of living that will be applicable to pension plans and also other matters, for the 2009 tax year.
The Internal Revenue’s Service code section 415, deals with the adjustments in contributions into plans that qualify under retirement plans. This section also states that the Commissioner should adjust these limits annually, in relation to the rise of the cost of living.
A good number of the limitations in pension plans will be changing during this year, since the rise in cost of living index, has covered the statutory requirements. Other limitations will however remain as they are.
In August of last year, we have been issued with Act 186, which changed the Puerto Rico Internal Revenue Code of 1994. This change was an increase in the limitation of the annual contribution that an employee makes which is pre tax.
This change affects plans that qualified as retirement plans under the Puerto Rico Code. This amendment has resulted in the elimination of the percentage of the pay limit, and also the amount of dollars, is going to gradually increase, until the year 2013.
As from January 1st, 2009 there has been an increase in the limit on the yearly benefit of plans that are found within the definitions of Section 415 b1A. The increase is of 10,000 dollars to a total of 195,000 dollars. Participants, who have been alienated from service before this date, have to calculate the limitation by multiplying their return limits.
Plan administrators that have been given constructive determination letters, should refrain from asking for new ones, just because of the annual amendments for the adjustments of the maximum plan limitations.
Reference: http://www.401khelpcenter.com/2009_401k_plan_limits.html
Saturday, April 4, 2009
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