Compensation Cap

Definition

Maximum amount of compensation on that may be taken into consideration when determining contributions  to employer sponsored retirement plans,  such as SEP IRAs, SIMPLE IRAs, 403(b) arrangements, qualified plans-such as 401(k)-profit sharing and pension plans..

The compensation cap does not apply to SIMPLE IRA matching contributions

Referring Cite

IRC § 401(a)(17), IRC § 404(l)

Additional Helpful Information

Compensation cap history

Related Articles Tutorial or Other Content

The IRS Announces Plan Limits for 2008 :