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IRS ANNOUNCES 2007 COST OF LIVING ADJUSTMENTS

Limit	*2006*	*2007*	*2008*
*Defined Benefit Plans*
The maximum dollar limitation for annual benefits under defined benefit plans under Internal Revenue Code (IRC) Section 415(b)(1)(A). EGTRRA amended this limitation for annual benefits to the lesser of $160,000 (as adjusted for inflation) or 100% of the participant's average compensation for his high 3 years.	$175,000	$180,000	$185,000
*401(k) Deferral Limit*
The limitation on cumulative elective deferrals to a 401(k), or SIMPLE retirement plan in a tax year, as coordinated under IRC Section 402(g)(1).	$15,000	$15,500	$15,500
*Age 50+ Catch-up Limits*
The special catch-up available for individuals at least 50 years old anytime during the year and make eligible pre-tax contributions to 401(k), 403(b), and governmental 457 plans. The special catch-up is available for individuals who are at least 50 years old anytime during the year and make eligible pre-tax contributions to a SIMPLE plan.	$5,000 $2,500	$5,000 $2,500	$5,000 $2,500
*Definition of Key Employee*
The compensation threshold used for determining key employees under IRS Section 416(i)(1)(A)(i).	$140,000	$145,000	$150,000
Definition of Highly Compensated Employees
The compensation threshold used for determining highly compensated employees under IRC Section 414(q)(1)(B).	$100,000	$100,000	$105,000
*Compensation Limit*
The annual limit of compensation that may be taken into account for contribution purposes in accordance with IRC Section 401(a)(17) (nongovernmental plan sponsors).	$220,000	$225,000	$230,000
*SIMPLE Retirement Accounts*
Compensation taken into account that an employee may elect to defer under a SIMPLE retirement plan described in IRC Section 408(p)(2).	$10,000	$10,500	$10,500

SOCIAL SECURITY ADMINISTRATION ANNOUNCES

2007 COST OF LIVING ADJUSTMENTS

*Taxable Wage Base*	*2006*	*2007*	*2008*
Maximum amount of earnings subject to payroll tax.	$94,200	$97,500	$102,000

This material was created to provide accurate and reliable information on the subjects covered. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation.

IRS Circular 230 disclosure:

These materials are not intended to be used to avoid tax penalties, and were prepared to support the promotion or marketing of the matters addressed in this document. The taxpayer should seek advice from an independent tax advisor.

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Definition of Highly Compensated Employees