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IRS Issues Covered Compensation Tables for 2019

Government Affairs

The IRS has issued tables concerning covered compensation under Internal Revenue Code Section 401(l)(5)(E) and Treas. Reg. §1.401(l)-1. The data is contained in Revenue Ruling 2019-6.

These tables provide information on covered compensation based on calendar year of birth and Social Security retirement age, and rounded covered compensation given calendar year of birth.

Code Section 401(l)(5)(E)(i) defines covered compensation as the average of the contribution and benefit bases in effect under Section 230 of the Social Security Act for each year in the 35-year period ending with the year in which the employee attains the Social Security retirement age.

Similarly, Treas. Reg. §1.401(l)-1(c)(7)(i) defines covered compensation for an employee as the average (without indexing) of the taxable wage bases in effect for each calendar year during the 35-year period ending with the last day of the calendar year in which the employee attains (or will attain) the Social Security retirement age.

Treas. Reg. §1.401(l)-1(c)(34) defines the taxable wage base as the contribution and benefit base under Section 230.

An employee's covered compensation for a plan year beginning before the 35-year period applicable under Treas. Reg. §1.401(l)-1(c)(7)(i) is the taxable wage base in effect as of the beginning of the plan year; covered compensation for a plan year beginning after that period is the employee's covered compensation for a plan year during which the 35-year period ends.

For purposes of determining covered compensation for the 2019 year, the taxable wage base is $132,900. This is $3,500 higher than the 2018 taxable wage base of $128,400.