2006 Plan Limits Announced

by Larry Shippee

On October 14, 2005 the IRS announced cost of living adjustments to the various dollar limits that are applicable to qualified plans. The 401(k) limit was raised to $15,000 ($20,000 with catch up), the defined contribution limit - $44,000 and the compensation limit - $220,000. Below is a complete list of the limits with a comparison to prior years. 

401(k) Plan Limits for Plan Year 2006 2005 2004
401(k) Elective Deferrals $15,000 $14,000 $13,000
Annual Defined Contribution Limit $44,000 $42,000 $41,000
Annual Compensation Limit $220,000 $210,000 $205,000
Catch-Up Contribution Limit $5,000 $4,000 $3,000
Highly Compensated Employees $100,000 $95,000 $90,000

Non 401(k) Related Limits 2006 2005 2004
403(b) / 457 Elective Deferrals $15,000 $14,000 $13,000
SIMPLE Employee Deferrals $10,000 $10,000 $9,500
SIMPLE Catch-Up Deferral $2,500 $2,000 $1,500
SEP Minimum Compensation $450 $450 $450
SEP Annual Compensation Limit $220,000 $210,000 $205,000
Social Security Wage Base $94,200 $90,000 $87,900
Defined Benefit Limit $175,000 $170,000 $165,000