Automatic Increases
Contribution & Benefit Base
Wage-indexed Amounts
Year of Coverage
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Latest amount & definition
The "old-law" contribution and benefit base for
2009 is $79,200. This is the base that
would have been effective without the enactment of the 1977 amendments
to the Social Security Act. The present-law contribution
and benefit base is substantially higher than the old-law base.
Purpose of the old-law base
The old-law contribution and benefit base is used by:
- the Railroad Retirement program to determine certain tax liabilities
and tier II benefits payable under that program to supplement the tier I
payments which correspond to basic Social Security benefits,
- the Pension Benefit Guaranty Corporation to determine the maximum
amount of pension guaranteed under the Employee Retirement Income
Security Act,
- Social Security to determine a year of
coverage in computing the special
minimum benefit, and
- Social Security to determine a year of coverage
(acquired whenever earnings equal or exceed 25 percent
of the old-law base for this purpose only) in computing benefits for
persons who are also eligible to receive pensions based on non-covered
employment.
Determination of the old-law
contribution and benefit base for 2009
By law, the old-law contribution and benefit
base for 2009 is determined to be the 1994 old-law base ($45,000)
multiplied by the ratio of the national average
wage index for 2007 to that for 1992, or, if larger, the
2008 old-law base ($75,900). If the amount
so determined is not a multiple of $300, it is rounded to the
nearest multiple of $300.
Calculation details
Amounts in formula |
1994 old-law base | $45,000 |
1992 average wage index | $22,935.42 |
2007 average wage index | $40,405.48 |
Computation | $45,000 times $40,405.48 divided
by $22,935.42 equals $79,276.80, which rounds to
$79,200. |
Higher amount | $79,200 exceeds $75,900,
so the old-law base for 2009 is $79,200 |
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