What are the limits applicable to a participants account in a defined contribution plan?
Internal Revenue Code Section 415 sets forth limits on the annual additions to a participant’s account in a defined contribution plan. Annual additions consist of all pre-tax salary deferrals, employer contributions, after-tax employee voluntary contributions, and reallocated forfeitures under all plans of the sponsoring employer. The annual addition limits for Plan Years ending in 2010 is the lesser of 100% of total compensation for the year or $49,000. Internal Revenue Code Section 402(g) and 414(v) sets forth limits on the total pre-tax contributions and Roth after-tax contributions. The deferral limit for 2010 is $16,500, with an additional $5,500 catch-up available for participants over age 50. Internal Revenue Code Section 401(a)(17) limits the amount of total compensation that may be taken into account for determining contributions. The 401(a)(17) compensation limit for 2010 is $245,000. • If your payroll service calculates any employer match or other required or discretionary c
