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Retirement Topics - Defined Benefit Plan Benefit Limits

Contributions to a defined benefit plan are based on what is needed to provide definitely determinable benefits to plan participants. Actuarial assumptions and computations are required to figure these contributions.

For 2013, the annual benefit for a participant under a defined benefit plan cannot exceed the lesser of:

    1. 100% of the participant's average compensation for his or her highest 3 consecutive calendar years, or
    2. $205,000

For 2014, the annual benefit cannot cannot exceed the lesser of:

    1. 100% of the participant's average compensation for his or her highest 3 consecutive calendar years, or
    2. $210,000

The dollar amounts are subject to cost-of-living adjustments in future years.

Additional Resources:

Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans)

 

 

Page Last Reviewed or Updated: 22-May-2014