Your Gift from the IRS for 2006: New Limits and Contribution
Amounts
Here are some of the changes in contributions and compensation
limits that are in place for 2006:
IRA Contributions:
For those eligible, the 2006 maximum allowable contribution for
a traditional IRA is $4000. This is the same for Roth IRA
contributions as well. If you are age 50 or over, the "catch up"
amount is an additional $1,000.
SEP Provisions:
For plan years beginning in 2006, the maximum compensation limit
moves from $210,000 to $220,000
Maximum SEP Contributions for 2006 increase to $44,000 from
$42,000, the limit in 2005.
Simple IRA Plans:
The non elective employer contribution wage base is $220,000.
Contribution limits for an employee remain at $10,000.
The "catch-up" provision for employees age 50 and over is $2500.
This is up $500 from 2005.
401(k) Contribution Limits:
For 2006 the elective employee contribution is $15,000. This may
also be subject to limitations under an employer plan. The
"catch-up" provision is $5,000.
Social Security Wage Base: The new wage base is $94,200 up from
$92,000 in 2005.
Annual Federal Gift Tax Exclusion:
Generosity increases $1,000 from 2005, with the new 2006
exclusion set at $12,000. In future years, this can again
increase for inflation adjustments but only in $1,000
increments. It probably safe to say we won't be seeing any
increases for a while.
Federal Estate Tax Exclusion Amount:
This has moved from $1,500,000 in 2005 to $2,000,000 in 2006 and
will remain level through 2008. This is still a hot potato in
Washington, and what will eventually happen here is still very
much up for grabs.
If you have any questions or comments, Chip would love to hear
from you. You may contact him by email at
dahlkefinancial@sbcglobal.net. You may also contact him at the
Living Trust Network's web site. Its URL is
http://www.livingtrustnetwork.com.
Copyright 2005. Living Trust Network, LLC. All Rights Reserved.