Part III. — Internal Revenue Bulletin 2011-47

2012 Limitations Adjusted As Provided in Section 415(d), etc. ¹

Notice 2011–90

Section 415 of the Internal Revenue Code (the Code) provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Commissioner annually adjust these limits for cost-of-living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under § 415. Under § 415(d), the adjustments are to be made pursuant to adjustment procedures which are similar to those used to adjust benefit amounts under § 215(i)(2)(A) of the Social Security Act.

The limitations that are adjusted by reference to § 415(d) generally will change for 2012 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. For example, the limitation under § 402(g)(1) on the exclusion for elective deferrals described in § 402(g)(3) will increase from $16,500 to $17,000 for 2012. This limitation affects elective deferrals to § 401(k) plans, § 403(b) plans, and the Federal Government’s Thrift Savings Plan, among other plans.

Cost-of-Living Adjusted Limits for 2012

Effective January 1, 2012, the limitation on the annual benefit under a defined benefit plan under § 415(b)(1)(A) is increased from $195,000 to $200,000. Pursuant to § 1.415(d)–1(a)(2)(ii) of the Income Tax Regulations, the adjustment to the limitation under a defined benefit plan under § 415(b)(1)(B) is determined using a special rule. This special rule takes into account the following recent history of changes in the cost-of-living indexes: (1) the cost-of-living index for the quarter ended September 30, 2009, was less than the cost-of-living index for the quarter ended September 30, 2008; (2) the cost-of-living index for the quarter ended September 30, 2010, was greater

than the cost-of-living index for the quarter ended September 30, 2009, but less than the cost-of-living index for the quarter ended September 30, 2008; and (3) the cost-of-living index for the quarter ended September 30, 2011, was greater than the cost-of-living index for all prior periods.

For a participant who separated from service before Jan. 1, 2010, the participant’s limitation under a defined benefit plan under § 415(b)(1)(B) for 2012 is computed by multiplying the participant’s 2011 compensation limitation by 1.0327 in order to reflect changes in the cost-of-living index from the quarter ended September 30, 2008, to the quarter ended September 30, 2011. For a participant who separated from service during 2010 or 2011, the limitation under a defined benefit plan under § 415(b)(1)(B) for 2012 is computed by multiplying the participant’s 2011 compensation limitation by 1.0376 in order to reflect changes in the cost-of-living index from the quarter ended September 30, 2010, to the quarter ended September 30, 2011.

The limitation for defined contribution plans under § 415(c)(1)(A) is increased in 2012 from $49,000 to $50,000. The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of § 415(b)(1)(A). After taking into account the applicable rounding rules, the amounts for 2012 are as follows:

The limitation under § 402(g)(1) on the exclusion for elective deferrals described in § 402(g)(3) is increased from $16,500 to $17,000.

The annual compensation limit under §§ 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $245,000 to $250,000.

The dollar limitation under § 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan is increased from $160,000 to $165,000.

The dollar amount under § 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5-year distribution period is increased

from $985,000 to $1,015,000, while the dollar amount used to determine the lengthening of the 5-year distribution period is increased from $195,000 to $200,000.

The limitation used in the definition of highly compensated employee under § 414(q)(1)(B) is increased from $110,000 to $115,000.

The dollar limitation under § 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in § 401(k)(11) or 408(p) for individuals aged 50 or over remains unchanged at $5,500. The dollar limitation under § 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in § 401(k)(11) or 408(p) for individuals aged 50 or over remains unchanged at $2,500.

The annual compensation limitation under § 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost-of-living adjustments to the compensation limitation under the plan under § 401(a)(17) to be taken into account, is increased from $360,000 to $375,000.

The compensation amount under § 408(k)(2)(C) regarding simplified employee pensions (SEPs) remains unchanged at $550.

The limitation under § 408(p)(2)(E) regarding SIMPLE retirement accounts remains unchanged at $11,500.

The limitation on deferrals under § 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is increased from $16,500 to $17,000.

The compensation amounts under § 1.61–21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation purposes is increased from $95,000 to $100,000. The compensation amount under § 1.61–21(f)(5)(iii) is increased from $195,000 to $205,000. The Code also provides that several pension-related amounts are to be adjusted using the cost-of-living adjustment un

1 Based on News Release IR–2011–103 dated October 20, 2011.

November 21, 2011 791 2011–47 I.R.B.

der § 1(f)(3). After taking the applicable rounding rules into account, the amounts for 2012 are as follows:

The adjusted gross income limitation under § 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing a joint return is increased from $34,000 to $34,500; the limitation under § 25B(b)(1)(B) is increased from $36,500 to $37, 500; and the limitation under § 25B(b)(1)(C) and (D) is increased from $56,500 to $57,500.

The adjusted gross income limitation under § 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing as head of household is increased from $25,500 to $25,875; the limitation under § 25B(b)(1)(B) is increased from $27,375 to $28,125; and the limitation under § 25B(b)(1)(C) and (D) is increased from $42,375 to $43,125.

The adjusted gross income limitation under § 25B(b)(1)(A) for determining the retirement savings contribution credit for all other taxpayers is increased from $17,000 to $17,250; the limitation under § 25B(b)(1)(B) is increased from $18,250 to $18,750; and the limitation under § 25B(b)(1)(C) and (D) is increased from $28,250 to $28,750.

The deductible amount under § 219(b)(5)(A) for an individual making qualified retirement contributions remains unchanged at $5,000.

The applicable dollar amount under § 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased from $90,000 to $92,000. The applicable dollar amount under § 219(g)(3)(B)(ii) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $56,000 to $58,000. The applicable dollar amount under § 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $169,000 to $173,000.

The adjusted gross income limitation under § 408A(c)(3)(C)(ii)(I) for determining the maximum Roth IRA

contribution for taxpayers filing a joint return or as a qualifying widow(er) is increased from $169,000 to $173,000. The adjusted gross income limitation under § 408A(c)(3)(C)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $107,000 to $110,000.

The dollar amount under Section 430(c)(7)(D)(i)(II) used to determine excess employee compensation with respect to a single-employer defined benefit pension plan for which the special election under section 430(c)(2)(D) has been made is increased from $1,014,000 to $1,039,000.

Drafting Information

The principal author of this notice is John Heil of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding the data in this notice, please contact the Employee Plans’ taxpayer assistance telephone service at 1–877–829–5500 (a toll-free call) between the hours of 8:30 a.m. and 4:30 p.m. Eastern time Monday through Friday. For information regarding the methodology used in arriving at the data in this notice, please e-mail Mr. Heil at RetirementPlanQuestions@irs.gov .

Certain Enrolled Retirement Plan Agents Not Required to Obtain a PTIN

Notice 2011–91

The regulations governing practice before the IRS, which are published in 31 CFR part 10 and are reprinted as Treasury Department Circular No. 230 (Circular 230), establish enrolled retirement plan agents as individuals who may practice before the IRS. Enrolled retirement plan agents’ practice is limited under section 10.3(e) of Circular 230 to representing taxpayers before the IRS with respect to issues involving the following programs or forms: employee plans determination letter program, employee plans compliance resolution system, employee plans master and prototype and

volume submitter program, and the Form 5300 and the Form 5500 series that are filed by retirement plans and plan sponsors but not with respect to actuarial forms or schedules.

Section 10.4(b) of Circular 230 requires individuals who want to become an enrolled retirement plan agent to have a valid preparer tax identification number (PTIN), and section 10.6(d)(3) requires enrolled retirement plan agents to have a valid PTIN to be eligible to renew their status as an enrolled retirement plan agent.

Section 1.03 of Notice 2011–6, 2011–3 I.R.B. 315 provides that a tax return preparer must have a PTIN to prepare for compensation any IRS form unless the form is expressly identified as not requiring a PTIN. Notice 2011–6 further provides a list of forms for which no PTIN is required. Among the forms included on this list are the Form 5300 and the Form 5500 series returns. The IRS has been informed, through public comments, that many enrolled retirement plan agents prepare only the Form 5300 or the Form 5500 series returns. These public comments are available upon request or at www.regulations.gov .

The Treasury Department and the IRS therefore intend to amend Circular 230 to remove the requirement for individuals to have a PTIN prior to applying for enrollment or renewing enrollment as enrolled retirement plan agents. Thus, effective immediately, enrolled retirement plan agents and applicants to become enrolled retirement plan agents are not required to have a PTIN to apply for enrollment or renew enrollment as an enrolled retirement plan agent. Enrolled retirement plan agents must, however, obtain a PTIN if, for compensation, they prepare, or assist in the preparation of, all or substantially all of any tax return or claim for refund that is not on the list of forms exempt from the PTIN requirement as provided in section 1.03 of Notice 2011–6 or any future guidance.

The principal author of this notice is Emily M. Lesniak of the Office of Associate Chief Counsel (Procedure and Administration). For further information regarding this notice, contact Emily M. Lesniak at (202) 622–4570 (not a toll-free call).

2011–47 I.R.B. 792 November 21, 2011

.02 Filers using Form 1098-MA . Filers may, at their option, use Copy A of Form 1098-MA to provide to the IRS the information required by Notice 2011–14. Filers file Copy A of Form 1098-MA with the IRS at the address listed in section 4.01 of this revenue procedure. Copy A of Form 1098-MA may not be filed electronically. Filing Copy A of Form 1098-MA for all homeowners satisfies the requirement in Notice 2011–14 to file a single statement with the IRS.

Filers may, at their option, use Copy B of Form 1098-MA to provide homeowners the information required by Notice 2011–14. See section 2.04 of this revenue procedure for the information required by Notice 2011–14.

.03 Filers not using Form 1098-MA . Filers who choose not to use Form 1098-MA should provide each homeowner with a statement setting forth the information required by Notice 2011–14, and provide the IRS with a single statement that lists the information for each homeowner required by Notice 2011–14. See section 2.04 of this revenue procedure for the information required by Notice 2011–14.

.04 Due dates . Filers must file the single statement (or Copy A of Form 1098MA) with the IRS by February 28, and furnish the homeowner’s statement (or Copy B of Form 1098-MA) to homeowners by January 31, of the year following the calendar year in which the Filer made payments to a mortgage servicer on a homeowner’s mortgage.