Archive for October, 2010

IRS Announces 2011 Pension Plan Limitations

Friday, October 29th, 2010

The Internal Revenue Service has released information related to the maximum limitations for certain tax credits and other related income tax items.  The information provided is not as complete as in past years as it does not also include updated tax rate tables or updated amounts for the child tax credit, Hope scholarship and lifetime learning credits, earned income credit, standard deduction, overall limit on itemized deductions, qualified transportation fringe benefits, the personal exemption, or interest on education loans.  One of the underlying reasons for this omission is due to the fact that the legislative branch (the U.S. Congress) has not made a decision as of this date regarding the provisions of the Bush-era tax law moratorium which, if not acted upon by December 31st, will expire this year.  Among the anticipated options availble to Congress are:

1.  Make the Bush-era tax law provisions permanent

2.  Temporarily extend the the provisions in to the future until economic conditions are more stable (referred to as “Extenders”)

3.  Completely change/modify the tax laws

President Obama is generally believed to  prefer the last option that will include higher taxes and/or a surtax on those Americans who earn more than $250,000.00/year.  To complicate matters, the action taken by Congress may hinge heavily upon the election results from our upcoming November election.   More definitive information can be found using this hyperlink:   (Revenue Procedure 2010-40). 

However, the IRS has released definitive guidance for the limitations related to pension plans in 2011  which is provided below: