IRS Announces 2012 Retirement Plan Limits

The various retirement plan limits have been announced for 2012. Here is a brief recap:

Salary Deferral Limit for 401(k) and 403(b) Plans is $17,000 (up from $16,500). Additional Salary Deferral for someone Age 50 by 12/31/2012 is $5,500 (stayed the same). Therefore a 50 year old can defer up to $22,500 in 2012 (increased from $22,000). The maximum amount of compensation counted for plan purposes is $250,000 (previously $245,000). Maximum Annual Additions Limit from all contributions is $50,000 (increased from $49,000 and you can add $5,500 if age 50 or more if salary deferrals available). The maximum Defined Benefit Plan retirement amount is $200,000 per year ($190,000 a year previously). The amount of compensation in 2012 that would make someone an HCE in 2013 is $115,000 (up from $110,000 for 2009, 2010 and 2011). The new Social Security Taxable Wage Base is $110,100 (up from $106,800).


For a more complete chart go here: Retirement Plan Limitations Chart

Fee Disclosure Under 408(b)(2) Delayed to 4/1/2012 and Participant Disclosure Delay to 5/31/2012

The ERISA section 408(b)(2) plan fiduciary-level fee disclosure rule (which applies to plan service-providers) has been extended to April 1, 2012 (three months later than the January 1, 2012 date proposed earlier). As to the participant-level fee disclosure rule, the earlier-proposed transition period has been modified to coordinate with the fiduciary-level rule. Participant-level disclosure is required no earlier than (i) 60 days after the fiduciary-level rule applies to the plan or (i) 60 days (not 120 days as had been proposed) after the applicability date (which is the first day of the first plan year beginning on or after November 1, 2011). This example is provided by DOL: "As to calendar year plans, the participant-level disclosure regulation becomes applicable on January 1, 2012. Pursuant to . . . the final transitional rule, such plans must furnish their first set of initial disclosures (all disclo sures other than disclosures required at least quarterly) no later than May 31, 2012, which is 60 days after the April 1, 2012 effective date of the 408(b)(2) regulation." Also, DOL said it will be addressing in the future several questions raised by commenters about the use of electronic delivery to participants of the disclosure.....text of an announcement from BenefitsLink Retirement Plans Newsletter 7/13/2011

Fee Disclosure Under 408(b)(2) Delayed to 1/1/2012

The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) has delayed by six months the applicability date of its new 408(b)(2) fee disclosure rules.

An EBSA news release said the setting of the new January 1, 2012 date was designed to give regulators more time to consider suggestions to its interim final rule that was published July 16, 2010.

IRS Comprehensive Checksheets for SIMPLE's, SEP's and SARSEP's

These detail IRS checksheets should be of help to your clients in determining if their SIMPLE, SEP or SARSEP plans are okay.  We would venture to say that the majority of plans are NOT being run properly.

SIMPLE checksheet

SEP Checksheet

SARSEP checksheet

Plan Sponsors Must Get and Analyze Fee Disclosures by July 16, 2011

Each vendor (recordkeeping financial institution, advisor/RIA, broker-dealer, TPA, etc.) to a retirement plan must make a full disclosure under Regulations 408(b)(2) of services and the related fees.  The Plan Sponsor must then determine if such fees are reasonable.  This must all be accomplished by July 16, 2011.

How can a Plan Sponsor determine if the fee being charged by a vendor is "reasonable"?  Only by securing quotes from other vendors.  Denis Wheatley (an RIA) in partnership with Plan Design Consultants, Inc. (a TPA firm that has been around for 36 years) can secure several quotes from various recordkeeping platforms and help do a comparison to the current vendor.

See an entertaining cartoon character video on YouTube regarding this process. 

YouTube video on comparative service

If any of your accounting clients sponsors a retirement plan and would like to have this comparative service provided at no obligation, please contact Denis Wheatley - see the bar on the right of this blog.