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  • Tax Increase Prevention & Reconciliation Act of 2005 and 401k Retirement Plans
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  • What Happens to your 401k when you are Divorced?
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  • Risks of Investing 401k Retirement Plan Savings in Company Stock
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  • Become a Millionaire with your 401k Plan
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  • Roth 401k - A Look at the Final Roth 401k Rules
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    Common Files

    October 25th, 2006 IRS Announces Max 401k Contribution Limits for 2007

    Are you going to Max out your 401k Account in 2007? Should you? Check out our Suggested Readings Below

    The IRS (Internal Revenue Service) announced on October 18th, 2006 the cost of living adjustments to pension and 401k retirement plans for the upcoming tax year of 2007. These adjustments are carried out by the Commisioner under Section 415 of the Internal Revenue Code. The 401k max contributions for the tax year 2007 and previous years is detailed below:
    Note: The max 401k contribution for the year 2007 is $15,500 which is up $500 from the year 2006.

      2007 2006 2005 2004 2003 2002
    Max 401k Contributions $15,500 $15,000 $14,000 $13,000 $12,000 $11,000
    Defined Annual Contribution Limits $45,000 $44,000 $42,000 $41,000 $40,000 $40,000
    Maximum Allowable Annual Compensation $225,000 $220,000 $210,000 $205,000 $200,000 $200,000
    401K Catch Up Contributions $5000 $5000 $4000 $3000 $2000 $1000

    Contribution Limits for Other Retirement Plans

      2007 2006 2005 2004 2003 2002
    403b Plans / 457 Plans $15,500 $15,000 $14,000 $13,000 $12,000 $11,000
    Simple Employee Deferral $10,500 $10,000 $10,000 $9,000 $8,000 $7,000
    Simple Catch-Up Deferral $2,500 $2,500 $2,000 $1,500 $1,000 $500
    SEP Minimum Compensation $500 $450 $450 $450 $450 $450
    Maximum Allowable SEP Compensation $225,000 $220,000 $210,000 $205,000 $200,000 $200,000

    Important Notes

    - Under Section 415(c)(1)(A), the Maximum Defined Annual Contribution Limits has been increased from $44,000 in 2006 to $45,000 in 2007.

    - Under Section 402(g)(1) and Section 402(g)(3), the maximum contribution limits for 403b plans and 457 plans is $15,500 in 2007, up from $15000 in 2006.

    - Under Section 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii), the maximum allowable compensation limit is increased from $220,000 in 2006 to $225,000 in 2007.

    - The Catch Up 401k Contributions for retirement savers over the age of 50 still remains at $5000 in 2007, under Section 414(v)(2)(B)(i).

    - The Simple Catch Up Deferrals remains at $2500 in 2007, under Section 414(v)(2)(B)(ii).

    Further Readings

    Become a Millionaire with your 401k Retirement Plan
    Published on: December 1st, 2006
    In the year 2004, the average household savings in USA averaged 0.8% of disposable income (income after all your expenses have been paid off). This rate has been the lowest since the Great Depression and the past 3 decades have seen savings rates of over 7%. Why is this 0.8% rate so low? Is it because Americans are just bad at saving money, or too much of our disposable income is going towards paying off our homes? In order to reach your goal of having $1 million upon retirement, here are a few suggestions: (Read Full)

    Sticking with your 401k Retirement Account Pays Off Long Term, study reveals
    Published on: September 17th, 2006
    A study carried out by 2 Washington DC state organizations revealed that 401k participants who contributed payments towards their employer sponsored 401k retirement plans over the past 7 years have seen growth rates of over 50%. This is inspite of the tech boom bust of 2000 and market declines in 2002.. (Read Full)

     

    		  

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