November 2002 Vol. VI, No. 2
ERISA, EMPLOYEE BENEFITS AND EXECUTIVE COMPENSATION NEWSLETTER
This newsletter reports the 2003 index limits for Social Security benefits, the Internal Revenue Service ("IRS") limits for qualified retirement plans, the Pension Benefit Guaranty Corporation ("PBGC") guarantee limit and the Medicare rates.
|Maximum annual payout from a defined plan at or after age 62||$160,000||$160,000*|
|Maximum annual contribution to an individual's defined contribution account||$40,000||$40,000|
|Maximum Section 401(k) and 403(b) deferrals and Section 457(b) elective deferrals||$11,000**||$12,000**|
|Section 401 (k) and Section 403 (b) catch-up limit for individuals aged 50 and older||$1000**||$2000**|
|Maximum amount of annual compensation that can be taken into account for determining benefits or contributions under a qualified plan||$200,000||$200,000|
|Test to identify highly compensated employees, based on compensation in preceding year||$85,000||$90,000|
* There are late-retirement adjustments for benefits starting after reaching age 65.
** These are calendar year limitations.
|for Social Security Tax||$84,900||$87,000|
|for Medicare||No Limit||No Limit|
|Maximum Social Security Benefit
for a worker retiring at age 65 and 2 months in 2003
|Earnings Test- Early Retirement (Age 62)
(amount that can be earned before benefits are cut)*
|PBGC Maximum Guarantee||$3,579.55/month||$3,664.77/month|
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 advertising.
* Under the Senior Citizens' Freedom to Work Act of 2000, people who are covered by Social Security can receive their full benefits once they reach Social Security normal retirement age (age 65 in 2002, age 65 and 2 months in 2003) regardless of how much they work and earn.
** The early retirement earnings test is higher in the year of an individual's 65th birthday. In 2002, it is $30,000/year for an individual reaching age 65 in 2002 ($2,500/month until the individual's 65th birthday). In 2003, it is $30,720/year for an individual attaining age 65 and 2 months ($2,560/month until two months after the individual's 65th birthday).