In a recent publication, the IRS announced pension and other limitations for 2007. Because rising inflation has triggered cost-of-living-index adjustments, many pension plan limitations will change for 2007, including the following:
- Section 402(g) limit on salary reduction and Roth contributions to 403(b) or 401(k) plans increases from $15,000 to $15,500;
- Limit on salary reduction contributions to 457(b) plans increases from $15,000 to $15,500;
- Section 415 annual dollar limit on combined employer and employee contributions to defined contribution plans rises from $44,000 to $45,000;
- Section 415 limit on maximum annual benefits from defined benefit plans rises from $175,000 to $180,000;
- Section 401(a)(17) limit on maximum amount of compensation that can be taken into account for calculating retirement plan contributions or nondiscrimination testing rises from $220,000 to $225,000 (doesn't apply to government or certain church plans);
- Section 401(a)(17) limit on maximum amount of compensation that can be taken into account for calculating retirement plan contributions for eligible participants in certain grandfathered governmental plans rises to $335,000.
However, some pension limits will not change in 2007:
- Limit on catch-up contributions that participants in 403(b), 401(k) or governmental 457(b) plans age 50 or over can make will remain at $5,000;
- Compensation floor for determining who is a highly compensated employee for nondiscrimination testing remains at $100,000;
- Limit on contributions to Traditional or Roth IRAs remains at $4,000;
- Limit on catch-up contributions that participants in Traditional or Roth IRAs age 50 or over can make will remain at $1,000.