2007 Tax Favored Savings Plan Updated Limits Summary
Are you confused about plan limits? This quick reference for 2007 should make your savings planning a little simpler.
If you do not know which plans may be best for your business structure, or what plans you are eligible to use, consult with a qualified advisor for assistance. They will also be able to do a comparison of your individual options.
Remember the maximum allowable compensation that can be used to determine plan contributions in 2007 is $225,000. For highly compensated employees, the ceiling is a much lower $100,000.
401(k) The maximum contribution including employer contributions and employee salary deferrals cannot exceed $45,000. The salary portion of total contributions cannot exceed $15,500 ($1,291.67 per month starting 1/1/2007) unless you are or will turn age 50 in 2007 and you elect to increase your salary deferral to as much as $20,500 ($1,708.33 per month starting 1/1/2007).
403(b) The salary portion of total contributions cannot exceed $15,500 500 ($1,291.67 per month starting 1/1/2007) unless you are or will turn age 50 in 2007 and you elect to increase your salary deferral to as much as $20,500 ($1,708.33 per month starting 1/1/2007).
412(i) These limits are the same as the Sol DB- Maximum benefit cannot exceed the lessor of $180,000 or 100% of the employee’s average compensation in their three highest years
457 The salary portion of total contributions cannot exceed $15,500 unless you are or will turn age 50 in 2007 and you elect to increase your salary deferral to as much as $20,500.
IRA’s For 2007 you can set aside up to $4,000 ($333.33 a month starting 1/1/2007). If you are over age 50, you can set aside up to $5,000 ($416.67 a month starting 1/1/2007). Something new to consider, the Pension Protection Act will allow you for the first time to elect to have some or all of your federal income tax refund deposited directly into an IRA.
Money Purchase The maximum contribution including employer contributions and employee salary deferrals cannot exceed $45,000.
Profit Sharing The maximum contribution including employer contributions and employee salary deferrals cannot exceed $45,000.
Roth IRA’s For 2007 you can set aside up to $4,000 ($333.33 a month starting 1/1/2007). If you are over age 50, you can set aside up to $5,000 ($416.67 a month starting 1/1/2007). Something new to consider, the Pension Protection Act will allow you for the first time to elect to have some or all of your federal income tax refund deposited directly into a Roth IRA.
SEP The maximum contribution including employer contributions and employee salary deferrals cannot exceed the lessor of 20% of net self employment earnings or a maximum of $45,000.
Simple IRA The maximum contribution is $10,500 ($875 a month starting 1/1/2007) unless you are or will turn age 50 in 2007 and you elect to increase contributions to as much as $13,000 (1,088.33 a month starting 1/1/2007).
Solo 401(k) The maximum contribution including employer contributions and employee salary deferrals cannot exceed $45,000. The salary portion of total contributions cannot exceed $15,500 ($1,291.67 per month starting 1/1/2007) unless you are or will turn age 50 in 2007 and you elect to increase your salary deferral to as much as $20,500 ($1,708.33 per month starting 1/1/2007).
Solo DB Maximum benefit cannot exceed the lessor of $180,000 or 100% of the employee’s average compensation in their three highest years.
Author: Amy Rose Herrick, a Member of the Paladin Registry
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