IRS announces 2010 pension plan & social security wage limits

2010 Pension Plan Amounts: The major pension plan and related amounts will stay the same for 2010. This means that the following amounts will remain unchanged from their 2009 amount: (1) benefit limit for defined benefit plans ($195,000); (2) defined contribution plan limit ($49,000); (3) compensation limit for determining benefits and contributions ($245,000); (4) definition of a highly compensated employee ($110,000); (5) elective deferral limit ($16,500); (6) SEP contribution threshold ($550); and (7) SIMPLE retirement account limit ($11,500).

2010 Social Security Wage Base: The social security wage base will remain at $106,800 in 2010. As in prior years, there is no limit to the wages subject to the Medicare tax, so all covered wages are subject to the 1.45% tax. The FICA tax rate, which is the combined social security tax rate of 6.2% and the Medicare tax rate of 1.45%, remains at 7.65%, while the self-employment tax rate remains at 15.3%. In addition, the threshold for coverage for domestic employees will stay the same at $1,700. For more on the 2010 cost of living adjustments, go to http://www.ssa.gov/cola .