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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