EBN Design



Veterans Day is an annual holiday honoring 25 million military veterans in the United States. Both a federal holiday and a state holiday in all 50 states, it is usually observed on November 11th or the nearest weekday. Veterans Day is also celebrated in other parts of the world as Armistice Day, the anniversary of the signing of the Armistice that ended World War I.

Al King, a simple shoe store owner in Emporia, Kansas, had the idea to expand the Armistice Day observation to support all veterans, not just those who served in World War I. King had been directly involved with the American War Dads during World War II. He began a local campaign directed towards Emporia merchants and the Board of Education to turn Armistice Day into an all veterans remembrance day. After the Chamber of Commerce determined that 90 percent of all Emporia merchants and the Board of Education supported closing their doors on November 11, 1953 to honor veterans, they took up the cause.

With the help of the US Rep. Ed Rees, a bill for the holiday was pushed through Congress as well. President Dwight Eisenhower signed it into law on May 26th, 1954. Congress amended this act on November 8, 1954, replacing "armistice" with Veterans and it has been known as Veterans Day ever since.

IRS Releases Update on COLA Figures for Pension Plans

On October 15, 2008, the Internal Revenue Service announced, in News Release 2008-118, the 2009 dollar limitation adjustments for various pension provisions.

Many of the pension provisions in the Internal Revenue Code are subject to dollar limitations, and many of those limitations are subject to annual adjustments for cost-of-living increases. Since 1993 those COLA adjustments have been based on the prior year's third-quarter figures so that the adjustments are now announced well before beginning of the next calendar year. In addition, most of the adjustments occur only when the cost-of-living increases accumulate to minimum threshold amounts specified in each applicable statutory provision. (See our Bulletins No. 07-92; 06-123; 05-109; 04-140; 03-109; 02-121; 01-111; 00-105; 99-101; 98-103; 97-91; 96-97; 95-96; 94-14 and 94-109).

1. Annual Addition Limit for Defined Benefit Plans. This limitation is used to determine the current maximum funding for defined benefit plans, based on an annual straight life benefit at age 65 equal to the lesser of 100% of the average annual compensation, or $160,000. (The dual defined benefit and defined contribution limit was repealed effective January 1, 2002, so plan sponsors can fund both a defined benefit and defined contribution plan to their full individual limits). This limit increased to $165,000 in 2004; $170,000 in 2005; $175,000 in 2006; to $180,000 in 2007; and to $185,000 in 2008. In 2009 it will increase to $195,000.

2. Annual Addition Limits for Defined Contribution Plans. Since the enactment of EGTRRA, defined contribution plans have been subject to an "annual addition" for each participants that cannot exceed 100% of compensation, or $40,000. The $40,000 statutory limit increased to $41,000 in 2004; $42,000 in 2005; $44,000 in 2006; to $45,000 in 2007; and to $46,000 in 2008. In 2009 it will increase to $49,000.

3. Limit on Pre-Tax Salary Deferrals to Pension Plans. Organizations that provide for salary deferrals into section 401(k) plans, section 403(b) arrangements and "eligible" section 457 plans are subject to in 2003; $13,000 in 2004; $14,000 in 2005; $15,000 in 2006; $15,500 in 2007 and 2008. In 2009 it will increase to $16,500.

4. SIMPLE Plan Contribution Limit. The statutory limit on contributions to SIMPLE plans under Revenue Code section 408(p)(2)(A) was $7,000. This amount increased to $8,000 in 2003; $9,000 in 2004; $10,000 in 2005 and 2006; and to $10,500 in 2007 and 2008. This limit will increase to $11,500 for 2009.

5. Catch-Up Contributions. The additional qualified plans catch-up contribution which is allowed for individuals age 50 and over increased from $2,000 to $3,000 in 2004 and to $4,000 in 2005. In 2006, 2007 and 2008, it increased to $5,000. For 2009 this will go up to $5,500. In addition, the catch-up contribution for SIMPLE IRAs and SIMPLE 401(k) plans increased from $2,000 to $2,500 for 2006, 2007 and 2008. This limit will remain unchanged at $2,500 for 2009.

6. Highly Compensated Employee Dollar Limitation. The dollar limit for determining who is a highly compensated employee under section 414(q) remained at $90,000 in 2002, 2003 and 2004. This amount increased to $95,000 in 2005, to $100,000 in 2006 and 2007 and to $105,000 for 2008. In 2009 it will increase to $110,000.

7. Key Employees in Top-Heavy Plans. In determining who is a key employee under top-heavy plans, section 416(i) includes officers with compensation greater than $130,000. That dollar limitation increased to $135,000 in 2005; to $140,000 in 2006; $145,000 in 2007 and to $150,000 for 2008. In 2009 the limit will increase to $160,000.

8. Limit on Compensation Taken Into Account in Pension Plans. Before 2004, the maximum amount of compensation that could be taken into account for qualified plan purposes was $200,000. That limit increased to $205,000 in 2004; $210,000 in 2005; $220,000 in 2006; $225,000 in 2007; and $230,000 in 2008. In 2009 it will increase to $245,000.

9. Social Security Wage Base. It is also important to note that the Social Security wage base will increase to $106,800 beginning in 2009 - up from $102,000 in 2008.

10. IRAs. The limit on IRA contributions remained at $4,000 through 2007. It went to $5,000 starting in 2008 and, beginning in 2009, the IRA contribution limit becomes subject to annual COLA adjustments.