Retirement Limits for 2007
Many people do spend time planning their contributions toward retirement.
Certianly it would be better if more did....
Numbers are now announced for 2007. Some of the more common ones are
listed below. That includes Social Security as well as private accounts.
| Social Security |
The maximum amount subject to Social Security is increasing from $94,200 (for 2006)
to $97,500 for 2007. The rate remains 6.2% for Social Security proper and 1.45% for Medicare.
There remains no limit for the Medicare tax. (Unrelated, the Social Security Administration
also announced a 3.3% increase in Social Security benefits for 2007.)
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401(k)
and other
402(g) plans |
The cost-of-living index met the requirements for an increase; this is now indexed for
inflation rather than requiring Congress to adjust the limits. For 2007 the maximum
contribution is $15,500. The "catch-up" provision remains at $5,000.
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|---|
| 415(b)(1)(A) |
The limitation on these defined benefit plans increased from $175,000 (2006)
to $180,000. For participants who separate from service before January 1, 2007, the limitation for defined benefit plans under Seciton 415(b)(1)(B) is computed by multiplying the participant's compensation limitation, as adjusted through 2006, by 1.0334.
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| 415(c)(1)(A) |
The limitation for these defined contribution plans is increased from $44,000 to $45,000.
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401(a)(17),
404(l),
408(k)(3)(C),
408(k)(6)(D)(ii) |
The annual compensation limit is increased from $220,000 to $225,000.
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| 416(i)(1)(A)(i) |
The dollar limitation concerning the definition of a key employee in a top-heavy
plan is increased from $140,000 to $145,000.
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This is but a sampling of the retirement plan changes. More information is available from the
IRS in
IR-2006-162 dated October18, 2006.
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