IRS Releases 2011 Limits

• Eligible long-term care premiums - For taxable years beginning in 2011, the limitations under Section 213(d)(10), regarding eligible long-term care premiums includible in the term "medical care," are as follows:
  • Age 40 or less (before the close of the taxable year) -  $340
  • More than age 40 but not more than age 50 - $640
  • More than age 50 but not more than age 60 - $1,270
  • More than age 60 but not more than age 70 - $3,390
  • More than age 70 - $4,240
• Medical savings accounts - For taxable years beginning in 2011, the term "high deductible health plan" as defined in Section 220(c)(2)(A) means, for self-only coverage, a health plan that has an annual deductible that is not less than $2,050 and not more than $3,050, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $4,100. For taxable years beginning in 2011, the term "high deductible health plan" means, for family coverage, a health plan that has an annual deductible that is not less than $4,100 and not more than $6,150, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $7,500.
• Adoption assistance programs - For taxable years beginning in 2011, under Section 137(b)(1) the maximum amount that can be excluded from an employee's gross income for the amounts paid or expenses incurred by an employer for qualified adoption expenses furnished pursuant to an adoption assistance program for other adoptions by the employee is $13,360. The amount excludable from an employee's gross income begins to phase out under Section 137(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $185,210 and is completely phased out for taxpayers with modified adjusted gross income of $225,210 or more.

• Annual Additions - The limit on annual additions (i.e., contributions) (under Code Section 415(c)(1)(A)) to defined contribution plans, including 401(k) plans, remains $49,000.
• HCE - The threshold for determining who is a "highly compensated employee" (under Code Section 414(q)(1)(B)) remains $110,000.
• Key Employee - The threshold for determining who is a "key employee" in a top-heavy plan (under Code Section 416(i)(1)(A)(i)) remains $160,000.

In addition to the IRS announcement, the Social Security Administration (SSA) has announced that the Social Security taxable wage base (i.e., the taxable maximum) remains $106,800 for 2011.