SABC Newsletter

  Southern Administrators and Benefit Consultants, Inc.

February, 2002

2002 PLAN LIMITS RELEASED   The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) significantly changed many of the factors for plan design and limits.  Fundamentals have been changed and nondiscrimination test will have to be reformulated for plan years beginning after 12/31/01. The new limits are as follows: 

PLAN LIMITS      2001     2002
401(k) $ 10,500 $ 11,000
403(b)    10,500    11,000
408(p)(2)(a)      6,500      7,000
457(b)(2)      8,500    11,000
415 Limit for:    
  Defined Contribution     35,000    40,000
  Defined Benefit   140,000 160,000
Highly Compensation    
  Section 414(q)     85,000    90,000
Section 613 (k) Key Employee in top-heavy plan   130,000
Control Employee Comp.    
Section 1.61-21(f)95(i)    75,000     80,000
Section 1.61-21(f)(5)(iii)   155,000   160,000
Includible Comp - Sec 401(a)(17)   170,000   200,000
SEP Comp. Limit   170,000   200,000
SEP Earning Threshold        450  
Limited Gov't plans(pre 7/1/93) 285,000 295,000
Emp. Stock Ownership Sec. 409 780,000  800,000
Max. to lenghten- 5yr distr. 155,000  160,000
PLAN LIMITS 2001       2002
Transportation Benefit    
Parking $   180 $   185
Transit        65      100
FICA Taxable Wage Base    
Social Sec. (rate 6.2%)    $80,400   $84,900
Medicare   (rate 1.45%)   No limit   No limit

ORTHODONTIA EXPENSES  

  Claiming orthodontia expenses through your Unreimbursed Medical Spending Account can save you hundred of dollars on taxes.   Unlike most expenses that have to claimed during the year in which the expense incurs, orthodontia expenses can be claimed over several years when you enter into  a payment plan with the provider. Below are the options available to you when claiming orthodontia expenses:

Contractual Agreement - If you enter into a contractual agreement with your provider you can claim your down payment during the plan year in which your payment was made and agreement signed. You must present a copy of your contract and receipt indicating the down payment has been paid.

Lump Sum Payment  -  If you  pay the total cost of your braces up front, you must present a receipt indicating  that your payment has been made in full and that they were made for othodontia expenses. Remember to claim the full cost of braces you must have paid the entire amount. If you have entered into a payment plan you can only  claim for months that are in the current plan year and the receipt must indicated the months that have been paid.

We would like to welcome Eve Edwards to the SABC family. She will be responsible for your flexible spending deposits and will be coming on board February 1, 2002.