What New for 2009

Payroll Taxes for 2009

Social Security tax applies to employee wages up to $106,800 and the rate is 6.20.  There is no limit on the amount of wages subject to Medicare tax and the rate remains at 1.45%

You no longer need to wonder what to do with Form W-4, as employers are no longer required to routinely send copies of Form W-4 Form claiming more than 10 allowances and certain “exempt” W-4 Forms to the IRS.  However, W-4 Forms should be kept on file as they are still subject to review by the IRS.

State of California EDD announced the UI rate schedule in effect for 2009 to be scheduled as “F+.”  This is schedule F plus a 15 percent emergency surcharge, rounded to the nearest tenth.  Schedule “F+” provides for UI contribution rates from 1.5% to 6.2%.

The ETT rate for 2009 is the same as it was last year, 0.1%.  The UI and ETT taxable wage limit did not change.  It will remain at $7,000 per employee per calendar year.

The SDI rate for 2009 is 1.1%.  The taxable wage limit is $86,698 for each employee per calendar year.  The maximum amount to be withheld is $953.68.

The beginning of a New Year is also a good time to review your retirement plans, employee medical and dental plans, and any other employee paid supplemental benefit plans.

Retirement Plans for 2009

The following are the maximum annual retirement plans contribution for 2007:    

            Payroll Deduction IRA – Up to $5,000.  Catch-up contributions of up to $1,000 for participant over age 50.

Defined Contribution Plan – Calculated up to 25% of compensation or a maximum of $49,000.

Simple IRA – Employee is allowed a contribution up to $11,500 and a catch-up contribution up to $2,500 for an employees age 50 and older.

An employer must either match the employee contributions up to 3% of compensation or makes a non-elective contribution of 2% of compensation.

401(k) – An employee is allowed a deferral of up to $16,500 and a catch-up contribution of $5,500.

Employer/employee combined contribution per participant is the lesser of 100% of compensation or $49,000 and a catch-up contribution of $5,500.

Defined Benefit – An employer must contribute an actuarially determined minimum funding amount.

Non-Qualified Plan – No limit on contributions.

Maximum compensation on which pension plan contributions can be made is $245,000 for 2009.

Mileage Allowance