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Newsletter

December 2010 = ; &n= bsp; = ; = Volume 27 - Number 2

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This newsletter is addressed to our clients, their attorneys, accountants and other professional advisors. Citations may be included for those who want to refer directly to the sou= rce material. IN THIS ISSUE: <= o:p>

RETIREMENT= PLAN LIMITS FOR 2011 - A summary of the limits and thresholds for 2011.

FEDERAL TAX WITHH= OLDING DEPOSIT UPDATE – The IRS has eliminated the option to deposit withholdings using the 8109 coupon. Starting in 2011, all withholding dep= osits from distributions made from retirement plans must be made electronically using EFTPS (Electronic Federal Tax Payment System).

R= ETIREMENT PLAN LIMITS FOR 2011

The limits and thresholds remain unchanged from 2010.

Maximum Contribution Limits	2010=	2011=
Maximum Annual Addition	$49,000	$49,000
401(k) Salary Reduction Contribution	16,500	16,500
401(k) Catch-Up Contribution	5,500	5,500
Maximum 403(b), SAR-SEP, 457	16,500	16,500
SIMPLE Salary Deferral Limit	11,500	11,500
SIMPLE Catch-Up Contribution	2,500	2,500
IRA Contribution	5,000	5,000
IRA Catch-Up Contribution	$1,000	$1,000

Compensation Thresholds	2010=	2011=
SEP Compensation for Participation	$550=	$550=
Maximum Annual Defined Benefit	195,000	195,000
Maximum Considered Compensation	245,000	245,000
Key Employee Officer Determination	160,000	160,000
Highly Compensated Employee	110,000	110,000
Social Security Taxable Wage Base	$106,800	$106,800

FEDERAL TAX WITHHOLDING DEPOSIT UPDA= TE

Prior to 2011, yo= u had up to four different methods for depositing federal withholdings from plan distributions. However, you may have been limited to a specific method du= e to the amount of withholdings you were required to deposit. These methods we= re:

<= span style=3D'mso-list:Ignore'>· The deposit may have been paid with a single deposit in the following January with a 945-V Payment Voucher if the total deposits for = the year were under $2,500.

<= span style=3D'mso-list:Ignore'>· The amount withheld could have been deposited with your Fede= ral Depository Bank using a Form 8109 Federal Tax Deposit Coupon.<= /span>

<= span style=3D'mso-list:Ignore'>· The deposit could have been paid by mailing an 8109 coupon a= nd payment to the Financial Agent at Federal Tax Deposit Processing, P.O. Box 970030, St. Louis, MO = 63197

= · &nbs= p; Deposits could be made electronically using EFTPS.

All methods of de= posit using the 8109 coupon have been eliminated effective January 1, 2011. Pay= ment options with EFTPS include:

· &nbs= p; Using the EFTPS Website or voice response system. You must be enrolled in EFTPS to pay via either system and payments must be scheduled by 8 p.m. ET the day before the due date to be received timely.

· &nbs= p; Asking your financial institution to initiate an ACH Credit payment on your beha= lf. This option requires an EFTPS enrollment, but your banking information is= not part of that enrollment. Financial institutions are not required to initiate payments for you, and may charge you a fee if they offer this service. Ch= eck in advance for cutoff times, which may be earlier than if you make a paym= ent yourself using EFTPS.

· &nbs= p; Engaging another trusted third party such as a tax professional or payroll service= to make the payment for you.

· &nbs= p; In extraordinary circumstances, engaging your financial institution to make a same-day tax wire payment for you. Financial institutions are not required to do t= his, and may charge you a fee. Check with your financial institution in advance for cutoff times.

It appears that s= ome plans may still be able to make an annual deposit using the 945-V Payment Voucher if the total withholdings for the year are less than $2,500. Howe= ver, this deposit method is not recommended because it holds a high potential = for late deposit penalties. Monthly depositors must make payments by the 15th day of the following month and semi weekly depositors within 3-days after= the end of the period. If a plan unexpectedly exceeds the $2,500 threshold, t= here is no way to correct the late deposits other than to pay the late deposit penalties.

Here's how E= FTPS works:

If you received notification that your plan is pre-enrolled, follow the instructions on t= he notice or call 1-800-555-4477 to get your PIN and then call 1-800-555-345= 3 to complete the setup. You will need the information listed in a, b & c under step 1 below.

STEP 1: Enroll online. To get started= , you will need the following:

a.= Taxpayer Identification Number. This is the plan trust EIN, = not your business EIN.

b.= Banking account number and routing number.

c.= Address and plan name.

Then, = simply follow these instructions:

1.= Go to www.eftps.gov and select "Enrollment."

2.= Select "Business."

3.= Enter the requested information.

4.= Enter the plan name where the business name is requested

5.= Submit.

In sev= en business days, you will receive your PIN in the mail.

STEP 2: Get your password.

After you receive your PIN, call 1-800-982-3526 to get a tempora= ry Internet password.

STEP 3: Make your payment online or by phone.

ONLINE:

1.= Go to www.eftps.gov and select "Make a Payment."

2.= Log in with your EIN/SSN, PIN, and Internet password. The fi= rst time you make a payment you will be prompted to change the temporary pass= word you received.

3.= Enter the payment information in the step-by-step screens. <= o:p>

4.= When you're finished, save a copy of the Payment Confirmation page. This contains your EFT Acknowledgment Number that acts as a receipt= for your payment instruction.

By PHO= NE:

1.= Call 1-800-555-3453.

2.= Enter your EIN/SSN and PIN.

3.= Press 1 to make a payment.

4.= Follow the prompts to complete your payment.

5.= Record your EFT Acknowledgement Number.

More information = can be found at the EFTPS website at www.eftps.gov. Please feel free to conta= ct us if you have questions or need additional information. <= /p>

We hope you are having a wonderful Holi= day and we wish you all a safe and happy New Year!

P= acific Retirement Plans, Inc. Provides Full

C= onsulting, Administration & Actuarial Services

·= Profit Sharing & 401(k) Plans	·= Target Benefit Pension Plans
·= Age Based and Comparability Plans	·= Money Purchase Pension Plans
·= Defined Benefit Pension Plans	·= Employee Stock Ownership Plans

216 N. San Mateo Drive<= span style=3D'font-size:8.0pt;mso-bidi-font-size:10.0pt;font-family:Arial'>= ·<= /span>= San Mateo, CA 94401<= o:p>

Phone (650) 696-9600 · Fax (650) 340-1226 · Email PRP@PRPlans.com

V= isit our Website www.prplans.com