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Feb. 22 — The Internal Revenue Service Feb. 22 issued compensation tables for calculating certain benefits under qualified pension, profit-sharing and stock bonus plans for plan year 2016.
The tables in Revenue Ruling 2016-5 list rounded amounts of covered compensation for birth years and Social Security retirement years. Plan administrators may use the covered compensation tables to determine permitted disparity when integrating retirement plan benefits with Social Security benefits, the IRS said.
An employee's covered compensation, as defined by tax code Section 401(l)(5)(E)(i), is the average of the contribution and benefit bases under Section 230 of the Social Security Act—also known as the taxable wage base—for each year in a 35-year period that ends with the year in which the employee reaches Social Security retirement age, the IRS said.
The taxable wage base is $118,500 for purposes of determining covered compensation in 2016, the IRS said. The taxable wage base was the same in plan year 2015.
Rev. Rul. 2016-5 was published in Internal Revenue Bulletin 2016-8.
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