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 href="http://www.livingtrustnetwork.com">http://www.livingtrustnetwork.com.
Copyright 2005. Living Trust Network, LLC. All Rights Reserved.
