Payroll Blog

Payroll Training, Tips, and News

Cost of Living Adjustment Announced

After two years with no Cost-of-Living Adjustment (COLA), the Social Security Administration (SSA) has determined a cost of living increase of 3.6% for the year 2012. This announcement was made on October 19, 2011, but Social Security beneficiaries will not see the COLA reflected in their benefits until those payable for January 2012.

A modern picture of the nation’s economy can be glanced from the COLAs for the past decade since 2002. Anyone interested in gaining a better overall picture can do so by viewing the COLAs of 1975 to 2012.

On October 20, 2011, the Internal Revenue Service (IRS) announced the dollar limitations on applicable pension and retirement plans in light of the 2012 COLA. Within the Internal Revenue Code (IRC), mandatory adjustments to the limits placed upon benefits and contributions, due to annual cost-of-living increases, are described under Code §415.

The annuity amounts to be adjusted are those received by retirees of the Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS), as well as beneficiaries under the Federal Employees Compensation Act (FECA). The 2012 COLA amount has lent to a 3.6% increase for CSRS retirees, a 2.6% increase for FERS retirees, and a 3.9% increase for FECA beneficiaries.

Comments are closed.

Try our payroll software in a free, no-obligation

30-day trial!

Easily run payroll in just 3 easy steps.

Start My Free Trial

Or you can EXPLORE A DEMO ACCOUNT!