IRS Announces Key 2010 Indexed Limits

 
Benefits Brief
November 9, 2009

The IRS has recently announced the various qualified plan related limits for 2010. The most widely used limits have not changed from their 2009 amounts and are summarized below.

2009

2010

Compensation limit

$245,000

$245,000

Section 415(b) limit

$195,000

$195,000

Section 415(c) limit

$49,000

$49,000

Section 402(g)/401(k) limit

$16,500

$16,500

Catch-up contributions

$5,500

$5,500

HCE threshold

$110,000

$110,000

Taxable wage base

$106,800

$106,800

Qualified Plan Year-End Reminders

There is an ever growing list of annual notices that must be distributed in connection with the routine operation of qualified plans. Some of the newer items include the following:

Medicare Part D Notice

Employers sponsoring group health plans that include prescription drug coverage are reminded of an obligation to issue a Notice of Creditable Coverage relating to that coverage before November 15, 2009. (The Notice must be provided annually prior to November 15 and at other times, such as upon enrollment.) The Notice provides information for Medicare eligible individuals and is designed to help them understand their employer-based prescription drug coverage as they evaluate their options under the Medicare Part D prescription drug program. A new sample Notice, which is revised from last year, is available on the Centers for Medicare & Medicaid Services (CMS) Web site.

In addition, employers must also inform CMS about the prescription drug coverage provided. This is an annual disclosure obligation, generally made within 60 days of the beginning of the plan year and at various other times, such as after a change in creditable coverage status. The disclosure to CMS can only be submitted electronically via the CMS Web site.

For the most part, we would expect insurers and third-party administrators to assist employers in meetings these obligations.