2005 Limitations For Employee Benefit Plans

The Internal Revenue Service has announced the cost-of-living adjustments applicable to dollar limitations for pension plans and other amounts for 2005. Several of the limits are changed for 2005.

This article also contains a table showing the 2005 and 2004 amounts so that you can easily determine those values that have changed.

Changes affecting 401(k) elective deferrals include: The individual annual dollar limitation increases from $13,000 per year to $14,000; the catch-up contribution limit for those over age 50 goes from $3,000 to $4,000; the annual compensation limit increases from $205,000 to $210,000; and the maximum annual addition to defined contribution plans, generally, increases from $41,000 to $42,000.