• IRS Releases 2011 Indexed Limits for Retirement Contributions
• RPGA Contributions for Disabled Participants
• Employees Working 1,000 Hours or More per Plan Year

IRS Releases 2011 Indexed Limits for Retirement Contributions

The IRS has released the 2011 indexed limits that apply to certain retirement plan contributions. The limits have not changed since the 2009 limits because inflation has been flat. They are as follows:

• 402(g): The maximum participant before-tax contribution is $16,500.
• Age 50 catch-up: The maximum additional “catch-up” before-tax contribution for participants who attain age 50 by the end of 2011 is $5,500.
• 415(c): The maximum combined employer and employee contributions to a defined contribution plan (before- and after-tax) is the lesser of $49,000 or 100% of the participant's compensation (taxable compensation plus before-tax salary deferrals, but not including housing allowance). This does not include age 50 catch-up contributions.
• 401(a)(17): The maximum participant compensation that can be taken into consideration for retirement contribution calculations is $245,000. (Churches and Qualified Church-Controlled Organizations are exempt.)
• Social Security compensation: The maximum level of compensation subject to FICA taxes (Social Security and Medicare) is $106,800. FICA taxes are calculated as 6.2% of the compensation + 1.45% of an employee’s entire compensation.

RPGA Contributions for Disabled Participants

The January 15, 2010 issue of For Your Benefit Express contained information about calculating RPGA contributions for disabled participants. For the purpose of determining RPGA contributions, compensation increases of 3% are added on January 1 of each year to the employee’s pre-disability compensation, provided he or she was disabled prior to July 1 of the previous year. For example:

Joe Smith was placed on long-term disability on April 1, 2008. His compensation on the day before he became disabled was $25,000. Effective January 1, 2009, his compensation amount was increased by 3% to $25,750 for RPGA. On January 1, 2010, his compensation was increased again by 3% to $26,522.50. Joe Smith’s RPGA non-matching contribution for the 2010 plan year is $2,121.80 (8% of compensation).

Please keep in mind that RPGA contributions for disabled participants continue until the earliest of:

• the date the participant ceases to be disabled;
• the date the participant terminates employment;
• the participant’s normal retirement age or, if earlier, the date the participant actually retires, if the participant became disabled before age 60; or
• the participant’s 70th birthday or, if earlier, the five-year anniversary of the participant’s short- or long-term disability, if the participant became disabled on or after age 60.

If a disabled participant elects to make before-tax and/or after-tax UMPIP participant contributions, the general agency will match these contributions (up to 2% of compensation).

Employees Working 1,000 Hours or More in a Plan Year

Non-matching Contributions

RPGA provides full-time employees a non-matching general agency contribution of 8% of the employee’s compensation. Full-time is defined as an employee who is scheduled to be, reasonably expected to be or actually employed for at least 1,000 hours per plan year. Therefore, an employee (permanent or non-permanent) who is not scheduled to or reasonably expected to work 1,000 hours but who does complete 1,000 hours in a plan year, should receive a retroactive credit for non-matching contributions to his or her RPGA account within a reasonable time.

Matching Contributions

RPGA provides part- and full-time employees a matching general agency contribution of up to 2% of the employee’s compensation. Therefore, if an employee elects to make before-tax and/or after-tax UMPIP participant contributions, the general agency will match these contributions (up to 2% of compensation).

Please contact Manuel Vargas at 1-847-866-4565 or mvargas@gbophb.org if you have any questions.

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