The Internal Revenue Service recently announced the new pension plan contribution limits for 2012. While there are many different limits that impact pension plans, the main limits that effect participants in the Ministers’ Retirement Plan are as follows:
- The salary reduction limit for 2012 will increase from $16,500 to $17,000. This limit is available to all participants regardless of age.
- The catch-up contribution for individuals age 50 or over will stay the same at $5,500 per year.
- The “church plan” catch-up provision, for participants who have been in the ministry or worked for a church organization longer than 15 years, remains unchanged at $3,000 per year with a maximum lifetime limit of $15,000.
- The overall contribution limit for 2012, not taking into consideration the age 50 or over catch-up contribution provision, will increase from $49,000 to $50,000.
- If a participant is 50 years of age or older, his or her maximum contribution limit in 2012 will be $55,500 after combining the regular limit with the catch-up limits. This level increases by $1000 over the 2011 limits.
A contribution limit worksheet will soon be available on our website for participants to use to calculate their maximum contributions for 2012. If you need the worksheet before it appears on the web site, please do not hesitate to send an e-mail request to email@example.com.
It is important to remember that the old “20% of salary” limits are no longer applicable. Now the limits are strictly dollar limits as set out above. Further, regardless of the limits, a participant is always limited by the amount of their taxable income.