November 2000 Vol. V, No. 2

The Internal Revenue Service has announced the following 2001 dollar limits for qualified plans and other tax-favored retirement plans (some of which could change if Congress passes pension reform legislation):

2000 2001
Maximum annual payout from a defined benefit plan at the Social Security normal retirement age $135,000 $140,000
Maximum annual contribution to an individual’s defined contribution account $30,000 $35,000
Maximum Section 401(k) and Section 403(b) elective deferrals $10,500 $10,500
Maximum amount of annual compensation that can be taken into account for determining benefits or contributions under a qualified plan $170,000 $170,000
Test to identify highly compensated employees $85,000 $85,000

The Social Security Administration has announced the following 2001 inflation-adjusted dollar tests and limits for Social Security taxes and benefits:

2000 2001
Wage Base:
   for Social Security Tax
   for Medicare
$76,200 $80,400
Earnings Test (amount that can be earned before benefits are reduced)
   Under Age 65 ($1 is withheld for every $2 in earnings over this amount)
$10,080/year $10,680/year
Maximum Social Security benefit for a single worker retiring at age 65 1,433/mo. 1,433/mo.

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In the event you desire legal advice, consultation or additional information, please contact Attorney Marcia S. Wagner, Attorney Christopher J. Sowden, Attorney M. Edward Chalé or Attorney Katharine Butler Nesta.

This Newsletter is provided for informational purposes only. It is not offered as or intended to constitute legal advice. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.