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February 2004 On-line Tax Planning
Pension Plan Limitations
for 2004
The Internal Revenue Service has announced cost-of-living adjustments to the
dollar limitations on benefits and contributions under qualified retirement
plans described in Sec 415 of the IRC. The cost-of-living adjustments and their
related increases will take effect January 1, 2004; several limitations will
also change due to the increases set by EGTRRA for 2004.
The changes as a result of
cost-of-living adjustment are as follows:
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The limit on the annual
benefit under a defined benefit plan under section
415(b)(1)(A)increased from $160,000 to $165,000. |
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The limit for defined
contribution plans under section 415(c)(1)(A) increased from $40,000 to
$41,000. |
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The annual compensation
limit under sections 401(a)(17), 404(l), 408(k)(6)(D)(ii) is increased from
$200,000 to $205,000. |
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The dollar amount under
section 409(o)(1)(C)(ii) for determining the maximum account balance in an
employee stock ownership plan subject to a 5 year distribution period
increased from $810,000 to $830,000, while the dollar amount used to determine
the lengthening of the 5 year period is increased from $160,000 to $165,000. |
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The annual compensation
limitation under section 40(a)(17) for eligible participants in government
plans is increased from $300,000 to $305,000. |
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The compensation amounts
under section 1.61-21(f)(5)(i) concerning the definition of “control employee”
increased from $160,000 to $165,000. |
The changes in limitations as
a result of EGTRRA are as follows:
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The limitation on the
exclusion for elective deferrals under section 402(g)(1) increased from$12,000
to $13,000. |
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The limitation on SIMPLE
retirement accounts under section 408(p)(2)(E) is increased from $8,000 to
$9,000. |
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The limitations on deferred
compensation plans of state and local governments and tax-exempt organizations
under section 457(e)(15) increased from $12,000 to $13,000. |
The dollar limitation for catch-up
contributions to an applicable employer plan other than the plans described in
section 401(k)(11) or 408(p) for individuals aged 50 or over is increased from
$2,000 to $3,000 for plans under section 414(v)(2)(B)(i) and from $1,000 to
$1,500 for plans under section 414(v)(2)(B)(ii).
Tax
Planning Archives
For More Information Contact:
Bucheri McCarty & Metz LLP
2366 W. Boulevard
P.O. Box 2147
Kokomo, IN 46904-2147
Telephone: (765) 236-2300
FAX: (765) 236-2333
Internet:
info@bmmcpas.com
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