Finally, cost of living adjustment (COLA) figures have moved enough to cause retirement plan contribution limits to rise after remaining the same for three years in a row.  On October 20, 2011, the IRS announced the new limits for 2012.  The elective deferral (employee contribution) limit increases from $16,500 to $17,000 for 401(k), 403(b) and most 457 plans, and the “catch-up” contribution limit for participants over age 50 in those plans remains unchanged at $5,500.

The §415(c)(1)(A) limit on total contributions to a defined contribution plan was raised from $49,000 to $50,000.

The §415(b)(1)(A) limitation on the annual benefit under a defined benefit pension plan increased from $195,000 to $200,000. 

The dollar threshold for determining “highly compensated employee” status also increased from $110,000 to $115,000, and the annual compensation limit under §401(a)(17) that governs the amount of compensation that may be considered in a defined contribution plan increased from $245,000 to $250,000.

Additionally, phase-out ranges relating to IRA contributions moved somewhat, and the taxable wage base for social security increased from $106,800 to $110,100.  For a full listing of changes, please see COLA Table.