IRS offers COLA Adjustments for 2010

The Internal Revenue Service announced cost-of-living adjustments for pension plans for the 2010 tax year, although the limitation on annual benefits for defined benefit and defined contributions remains unchanged.

Effective Jan. 1, 2010, the limitation on the annual benefit under a defined benefit plan remains at $195,000. For DB plan participants who leave the company prior to that date, the limitation for defined benefit plans is computed by multiplying the participant’s compensation limitation, as adjusted through 2009, by 1.0000, the IRS reported.

The limitation for defined contribution plans remains unchanged for 2010 at $49,000.

The IRS has listed the amounts for adjustments in 2010, after taking into account the applicable rounding rules. The Code also provides that several pension-related amounts are to be adjusted using the cost-of-living adjustment.

To view the applicable rounding adjustments and the pension-related amounts Click Here for the full article.