October 23, 1998
IRS Announces 1999 Limitations Adjusted
as Provided in Section 415(d) of
the Internal Revenue Code
WASHINGTON - The Internal Revenue Service today announced
cost-of-living adjustments applicable to dollar limitations that
are adjusted at the same time and in the same manner as provided in
section 415(d) of the Internal Revenue Code.
Section 415 of the Internal Revenue Code provides for dollar
limitations on benefits and contributions under qualified retirement
plans. It also requires that the Commissioner annually adjust these
limits for cost-of-living increases. Effective January 1, 1999, the
limitation on the annual benefit under a defined benefit plan under
section 415(b)(1)(A) remains unchanged at $130,000. For participants
who separated from service before January 1, 1999, the limitation
for defined benefit plans under section 415(b)(1)(B) is computed by
multiplying the participant's compensation limitation, as adjusted
through 1998, by 1.0160.
The limitation for defined contribution plans under section
415(c)(1)(A) remains unchanged at $30,000.
The Code provides that various other dollar amounts are to be
adjusted at the same time and in the same manner as the dollar
limitation of section 415(b)(1)(A). These dollar amounts and the
adjusted amounts are as follows:
The limitation under section 402(g)(1) on the exclusion for
elective deferrals described in section 402(g)(3) remains unchanged
The dollar amount under section 409(o)(1)(C)(ii) for determining
the maximum account balance in an employee stock ownership plan
subject to a 5-year distribution period is increased from $725,000
to $735,000, while the dollar amount used to determine the
lengthening of the 5-year distribution period remains unchanged at
The limitation used in the definition of highly compensated
employee under section 414(q)(1)(B) remains unchanged at $80,000.
The annual compensation limit under sections 401 (a)(1 7) and
404(l) remains unchanged at $160,000. The annual compensation
limitation under section 401 (a)(1 7) for eligible participants in
certain governmental plans that, under the plan as in effect on July
1, 1993, allowed cost-of-living adjustments to the compensation
limitation under the plan under section 401 (a)(1 7) to be taken
into account, is increased from $265,000 to $270,000.
The compensation amount under section 408(k)(2)(C) regarding
simplified employee pensions (SEPs) remains unchanged at $400. The
compensation amount under section 408(k)(3)(C) for SEPs remains
unchanged at $160,000.
The limitation under section 408(p)(2)(A) regarding simple
retirement accounts remains unchanged at $6,000.
The limitation on deferrals under sections 457(b)(2) and (c)(1)
concerning deferred compensation plans of state and local
governments and tax-exempt organizations remains unchanged at
The compensation amounts under sections 1.61-21 (f)(5)(i) and
(iii) of the Income Tax Regulations concerning the definition of
"control employee" for fringe benefit valuation purposes are $70,000
and $145,000, respectively.
Administrators of defined benefit or defined contribution plans
that have received favorable determination letters should not
request new determination letters solely because of yearly
amendments to adjust maximum limitations in the plans.
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