Over the last year, defined contribution plan participants likely have felt like they just can’t get a break. I’m sorry to say a little bird at Mercer tells me the savings outlook may not improve next year, depending on the results of a government calculation.
Here’s the breakdown: Limits for DC and DB plans — including 401(k) deferrals and catch-up contributions — are adjusted each year based on an IRS calculation that, among other factors, takes inflation into account. As inflation the last several months has been negative, this mythical government calculator could produce limits for 2010 that are lower than those currently in effect for 2009. If that occurs, employers will be looking to the IRS to decide if the limits will remain unchanged for 2010, or be reduced.
