Most Retirement Plan Dollar Limits Increase for 2007

retirement

Most Retirement Plan Dollar Limits Increase for 2007

IRS has announced the 2007 cost-of-living adjustments (COLAs) for retirement plans. Many of the limits applicable to pension, and other retirement plans, increase for 2007. For most of the limitations, the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment.

Increased limits. The following plan limits are increased for inflation effective Jan. 1, 2007:

Defined benefit plans. The limitation on the annual benefit under a defined benefit plan under Code Sec. 415(b)(1)(A) increases from $175,000 to $180,000. For participants who separated from service before Jan. 1, 2007, the 100% of average high-three-years’ compensation under Code Sec. 415(b)(1)(B) is computed by multiplying the participant’s compensation limitation, as adjusted through 2006, by 1.0334.
Defined contribution plans. The limit on the annual additions to a participant’s defined contribution account under Code Sec. 415(c)(1)(A) increases from $44,000 to $45,000.
Elective deferrals. The Code Sec. 402(g)(1) limit on the exclusion for elective deferrals described in Code Sec. 402(g)(3) increases from $15,000 to $15,500.
Annual compensation limit. The maximum amount of annual compensation that can be taken into account for various qualified plan purposes, including Code Sec. 401(a) (17) , Code Sec. 404(l) , Code Sec. 408(k)(3)(C) , and Code Sec. 408(k)(6)(D)(ii), increases from $220,000 to $225,000.
Key employee in top-heavy plan. The dollar limit under Code Sec. 416(i)(1)(A)(i) , relating to the definition of key employee in a top-heavy plan increases from $140,000 to $145,000.
ESOP five-year distribution period. The dollar amount under Code Sec. 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan (ESOP) subject to a five-year distribution period increases from $885,000 to $915,000, while the dollar amount used to determine the lengthening of the five year distribution period increases from $175,000 to $180,000.
Government plans. The annual compensation limitation under Code Sec. 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, ’93 allowed COLAs to the plan’s compensation limit under Code Sec. 401(a)(17) to be taken into account, increases from $325,000 to $335,000.
SEPs. The compensation limit under Code Sec. 408(k)(2)(C) (amount of compensation above which an employee who meets other requirements must be able to participate in the employer’s SEP plan) increases from $450 to $500.
Deferred compensation plans. The limit on deferrals under Code Sec. 457(e)(15), concerning deferred compensation plans of state and local governments and tax exempt organizations, increases from $15,000 to $15,500.
Control employee. The employee compensation amounts used in the definition of “control employee” for purposes of the auto commuting rule of Reg. § 1.61-21(f)(5) (i) increases from $85,000 to $90,000; and the compensation amount under Reg. § 1.61-21(f)(5)(iii) increases from $175,000 to $180,000.
SIMPLE accounts. The maximum amount of compensation an employee may elect to defer under Code Sec. 408(p)(2)(E) for a SIMPLE plan increases from $10,000 to $10,500.
Unchanged limits. The following dollar limits are unchanged:
Highly compensated employee. The dollar limit used in defining a highly compensated employee under Code Sec. 414(q)(1)(B) remains unchanged at $100,000.
Catch-up contributions. The dollar limit under Code Sec. 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in Code Sec. 401(k)(11) or Code Sec. 408(p) for individuals aged 50 or over remains at $5,000. The dollar limit under Code Sec. 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Code Sec. 401(k)(11) or Code Sec. 408 (p) for individuals aged 50 or over remains at $2,500.

Follow GROCO on Facebook

Contact Us

—————————————————————————————————————————————————————————————————————

We hope you found this article about “Most Retirement Plan Dollar Limits Increase for 2007” helpful.  If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page  or our website at www.GROCO.com.  Unfortunately, we no longer give advice to other tax professionals gratis.

To receive our free newsletter, contact us here.

Subscribe our YouTube Channel for more updates.

Alan Olsen, CPA

Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com.  GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.

 

Alan L. Olsen, CPA, Wikipedia Bio

 

 

GROCO.com is a proud sponsor of The American Dreams Show.

 

American-Dreams-Show-Accounting-firm-in-ca-cpa-tax-advisors-groco-alan-olsen

The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.

Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.

The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.

They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..

American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:

Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…

Untitled_Artwork copy 4

MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness.  It’s mission statement:

In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.

Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.

Posted in

Four Things to Consider Now for the Upcoming Tax Season

It’s November already. How can that be possible? The more important question is what are you going to do about it? Although it seems like the last tax season just ended a few months ago, the next tax season is just a few weeks away. That means you should already be preparing for your inevitable…

Soccer Star Will Have to Go to Trial for Alleged Tax Evasion

The ongoing tax saga of soccer star Lionel Messi will continue. That news comes after a judge in Spain ruled that the Barcelona FC star would indeed have to stand trial for tax fraud charges in association with his many endorsement deals with foreign companies. The news comes just days after a report stated that…

Common Trust Fund Questions for Beginners

Are you considering a trust fund? Trust funds are a very useful tool for saving and investing money, but a lot of people aren’t totally sure how to use a trust or even how they work. Trust funds essentially hold assets, like property, a business or money, for the benefit of another person, a group…

IRS Wants A Lot More Than a Coke and a Smile From Coca-Cola, Co.

The Coca-Cola, Co. wants everyone to share a Coke and a smile but the IRS just wants the soft drink company to share it’s profits with the government, in the form of it’s tax bill. The IRS claims that the company has skipped out on more than $3 billion in taxes and interest due from…