IRS Announces 2005 Retirement Plan Limits

The Internal Revenue Service has announced cost-of-living adjustments applicable to dollar limitations for retirement plans for 2005. Many of the limitations have increased. Some of the limitations which increase do so as a result of the Economic Growth and Tax Relief Reconciliation Act (“EGTRRA”), enacted in 2001, rather than cost-of-living adjustment. Changes include an increase in the 401(k) limit and the catch-up contribution limit, the amount of compensation a qualified plan can take into account, the maximum benefit payable from a defined benefit plan, the maximum contribution to a defined contribution plan and the compensation used to determine highly compensated employees.