Maximum Contribution
Including Catch-Up Provisions*
2002
3,000
3,500
2003
3,000
3,500
2004
3,000
3,500
2005
4,000
4,500
2006
4,000
5,000
2007
4,000
5,000
2008
5,000
6,000
*Those who reach age 50 by the end of the year can contribute an additional $500 in 2002-2005 and an additional $1,000 for 2006 and each subsequent year.
New SIMPLE IRA Contribution Limits for Elective Deferrals
Year
Maximum Contribution
Maximum Contribution
Including Catch-Up Provisions*
2002
7,000
7,500
2003
8,000
9,000
2004
9,000
10,500
2005
10,000
12,000
2006
10,000
12,500
The catch up contributions are also eligible for employer matching contributions.
New Contribution Limits for Company Retirement Plans (Including 401(k)s, 403(b)s, and Section 457 Plans)
Year
Maximum Contribution
Maximum Contribution
Including Catch-Up Provisions*
2002
11,000
12,000
2003
12,000
14,000
2004
13,000
16,000
2005
14,000
18,000
2006
15,000
20,000
*Those who reach age 50, by the end of the year can contribute an additional $1,000 in 2002, an additional $2,000 in 2003, $3,000 in 2004, $4,000 in 2005 and $5,000 in 2006 and each subsequent year.
New SEP Contribution Limits
Beginning in 2002 EGTRRA 2001 has increased SEP (Simplified Employee Pension) contributions that can be made by self-employed people or for employees of companies who offer SEPs. Under prior law, in effect through 2001, the maximum SEP contribution was $25,500 which was based on 15% of a maximum compensation of $170,000 ($170,000 x 15% = $25,500).
The intent of the tax law (EGTRRA 2001) was to raise the percentage that can be contributed to a SEP for 2002 to 25%, but the tax writers goofed. They forgot to change one of the Code sections. That left the percentage at 15%, but that has now been corrected by the Job Creation and Worker Assistance Act of 2002, signed into law on March 9, 2002.
The 2002 SEP limit is now the 25% of compensation that was intended by the original tax act. For 2002, 25% of compensation of up to $200,000 can be contributed to a SEP, but regardless of the amount of compensation, the SEP contribution is limited to $40,000 per year.
If you are an employee of a company that offers a SEP for 2002 at the highest percentage, the 25%, and your income is $200,000, your employer is limited to making a $40,000 contribution to your SEP. If you are self-employed, the 25% nets down to 20%. If your 2002 net earnings from self-employment was $200,000, you would be limited to a maximum SEP contribution of $40,000 (20% of the $200,000). That's a huge increase over the $25,500 maximum for 2001.
Retirement Planning
2005
2006
Elective deferral / annual contribution limits:
*Deferral limit for 401(k)s, 403(b)s, SEPs, and federal Thrift Savings Plan
$14,000
$15,000
*Deferral limit for SIMPLE retirement plans
$10,000
$10,000
*Section 457 plan annual contribution limit
$14,000
$15,000
Defined contribution plan annual additions limit (Section 415 limit):
$42,000
$44,000
Defined benefit plan annual benefit limit:
$170,000
$175,000
IRA contribution limit (traditional and Roth IRAs):
$4,000
$4,000
Additional "catch-up" limits (individuals age 50 or older)
*IRAs
$500
$1,000
*401(k) plans, 403(b) plans, and 457 plans
$4,000
$5,000
*SIMPLE 401(k) plans and SIMPLE IRA plans
$2,000
$2,500
Traditional IRA - Income phase-out range for determining deductibility:
*Covered by an employer-sponsored plan and filing as:
Single
$50,000-$60,000
$50,000-$60,000
Married filing jointly
$70,000-$80,000
$75,000-$85,000
Married filing separately
$0-$10,000
$0-$10,000
*Not covered by an employer-sponsored retirement plan, but filing joint return with a spouse who is covered by an employer-sponsored retirement plan
$150,000-$160,000
$150,000-$160,000
Income phase-out range for determining ability to fund Roth IRA:
*Single
$95,000-$110,000
$95,000-$110,000
*Married filing jointly
$150,000-$160,000
$150,000-$160,000
*Married filing separately
$0 - $10,000
$0 - $10,000
*Annual income limit for determining ability to convert traditional IRA to Roth IRA
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