IRS Announces Pension Plan Limitations for 2007
Both the Internal Revenue Service and the Social Security Administration are preparing for the New Year. On October 18, 2007 the IRS announced the 2008 cost-of-living adjustments to the limitations on benefits and contributions under qualified retirement plans. The new maximums for next year and the corresponding maximums for 2007 are highlighted below.
Annual Additions
The limit on annual additions under Section 415(c)(1)(A) which include employer contributions, employee contributions, and forfeitures:
§ 2007: $45,000
§ 2008: $46,000
Compensation Limit
The annual limit on compensation of each employee that can be taken into account for qualified plans under Section 401(a)(17), for deduction purposes under Section 404(l), for SEPs under Section 408(k)(3)(C), and for SAR-SEPs under Section 408(k)(6)(D)(ii):
§ 2007: $225,000
§ 2008: $230,000
Elective Deferral Maximum
The per person calendar year limit on elective deferrals for 401(k) plans, SAR-SEPs, and 403(b) contracts under Section 402(g)(1):
§ 2007: $15,500
§ 2008: $15,500
The per person calendar year limit on elective deferrals for SIMPLE plans and SIMPLE IRAs under Section 408(p)(2)(E):
§ 2006: $10,000
§ 2007: $10,500
§ 2008: $10,500
Catch-up Contributions
The annual limit on catch-up contributions for participants more than 50 years old for 401(k) plans, SARSEPs, and 403(b) contracts under Section 414(v)(2)(B):
§ 2007: $5,000
§ 2008: $5,000
The annual limit on catch-up contributions for SIMPLE plans and SIMPLE IRAs:
§ 2007: $2,500
§ 2008: $2,500
Highly Compensated Employees
The threshold for determining who is a Highly Compensated Employee under Section 414(q)(1)(B):
§ 2007: $100,000
§ 2008: $105,000
Key Employees
The threshold for determining who is a Key Employee in a top-heavy plan under Section 416(i)(1)(A)(i):
§ 2007: $145,000
§ 2008: $150,000
SEP and SAR-SEP Participation
The threshold for determining participation in a SEP or SARSEP under Section 408(k)(2)(C):
§ 2007: $500
§ 2008: $500
Social Security Wage Base
The Social Security Administration has announced that the Social Security taxable wage base is increased from $97,500 to $102,000.
Please contact your DWS Scudder representative, if you have questions about how these increases may affect your plan.
The IRS news release is available at: http://www.irs.gov/newsroom
The Social Security Administration news release is available at: http://www.ssa.gov/pressoffice