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Contribution and Benefit Limits for Qualified Plans The annual contribution limits for most qualified retirement plans increased as of Jan. 1, 2002. Increased contribution limits have never been more critical than now. As baby-boomers near retirement, many recognize that significant action is required to preserve the financial soundness of Social Security, and are preparing to fund a large portion of their retirements themselves. These changes also give employers significant flexibility without increased costs, as most of the limits make it easier for employees to contribute their own money to plans. |
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Regular IRAs and Roth IRAs Workers who are eligible to establish Regular or Roth IRAs may contribute as follows:
back to top 401(k), 403(b), 457 and SARSEP Plans Workers who participate in employer-sponsored, deferral-type retirement plans, such as 401(k), 403(b), SARSEP and 457 plans, can defer more of their pre-tax income, as follows:
back to top Catch-Up Contributions Participants age 50 and older who defer salary into 401(k), 403(b), SARSEP and 457 plans may make additional catch-up deferral contributions, as follows:
back to top SIMPLE IRA/401(k) Deferrals Deferrals made to savings incentive match plans for employees of small employers (SIMPLE) and 401(k) plans are subject to the following annual limit:
back to top SIMPLE Catch-Up Contributions As with other plans, catch-up contributions are also possible for participants, age 50 or over, in SIMPLE plans, as follows.
Employers are not required to permit catch-up contributions. But since these contributions are not subject to nondiscrimination rules, and the eligibility standards are so easily established (anyone age 50 or older is eligible), the catch-up provisions are an easy, cost-free method to help employees save even more for retirement and increase employee goodwill at the same time. back to top Defined Contribution Limit The defined contribution annual limit is $45,000 (indexed for future years) or 100% of compensation. back to top Profit-Sharing Plan Contribution/Deduction Limit The employer annual deduction limit for profit-sharing plans is 25 percent of eligible payroll. back to top Defined Benefit Plan The defined benefit plan annual benefit limit is $180,000 for 2007 (indexed for inflation in future years). back to top Compensation Limitation The compensation limit used to determine contributions and benefits to qualified plans under IRC Sec. 401(a)(17) is $225,000 for 2007 (indexed for inflation in future years). back to top Next: IRA Rollovers |
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