Adjusted Limits

The Internal Revenue Service has announced the 2008 adjusted limits that affect the operation of tax-qualified retirement plans, including 401(k) plans, and certain other types of employee benefit plans. Please see the table below for these new adjusted limits, effective January 1, 2008.

Social Security

The Social Security (OASDI) taxable wage base, which governs the amount of pay subject to Social Security tax withholding and affects plans that are "integrated" with Social Security, also is adjusted annually. For 2008, the wage base has been increased to $102,000. The Medicare tax, however, applies to all wages without limit.



2008 Limit

Maximum 401(k) Contributions


Maximum Compensation Limit


Highly Compensated Employees

      Earning (in previous year) more than


Key Employee Limit


Annual Contribution Limit for Defined Contribution Plans


Annual Benefit Limit for Defined Benefit Plans


SIMPLE Plan Limit


Age 50 and Older Catch-Up Contribution Limit

      All plans other than SIMPLE Plans

      SIMPLE Plans



Annual Contribution Limit for Section 457 Deferred Compensation Plans (government and tax-exempt organizations)



       Maximum account balance subject to five-year distribution period

      Each dollar amount of account balance in excess of $915,000 that adds one year to distribution period



Simplified Employee Pension Plans (SEPs)

      Contributions must be made for employees earning at least


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.