Individual (k), IRA and Qualified Plan Contribution Table and Limits

for 2002 and beyond
This page was updated on 04-Jun-03
 
The new legislation increases annual Traditional or Roth IRA contribution limits as follows:

• 2002 - 2004: $3,000
• 2005 - 2007: $4,000
• 2008 and thereafter $5,000 (indexed beginning in 2009)

IRA Catch-up Contributions
 
IRA holders age 50 or older may contribute an amount in excess of the basic annual contribution, as follows:

• 2002 - 2005: $500
• 2006 and thereafter - $1,000

The 401(k) makeup provision:

• 2002 1000
• 2003 2000
• 2004 3000
• 2005 4000
• 2006 5000
• 2007 5000 Plus possible cost of living adjustments

to Employer Plans
 
-The deduction limit for profit sharing plans has been increased from 15 percent to 25 percent of compensation.
 
The annual additions limit for qualified plans has been increased from the lesser of 25% of compensation or $35,000 to the lesser of 100% of compensation or $40,000 (not including "catch-up" deferrals).
 
- SEP deduction limit, was raised to 25 percent of compensation. The individual limit was also raised to the lesser of 25% of compensation or $40,000.
 
Beginning in 2003, workers will be allowed to make contributions to IRA arrangements within many employer-sponsored qualified retirement plans (QRPs). Such amounts would be accounted for separately within the plans.

Increased Deferral Limits
 
The annual deferral limits of qualified plans are described below.
 
401(k), 403(b), 457 and SAR-SEP Deferral Contributions

• 2002 - $11,000
• 2003 - $12,000
• 2004 - $13,000
• 2005 - $14,000
• 2006 and thereafter - $15,000 (indexed beginning in 2007)

Catch-Up Contributions
 
Participants age 50 or older who defer salary into 401(k), 403(b), 457 or SAR-SEP plans may make catch-up deferral contributions, as follows.

• 2002 - $1,000
• 2003 - $2,000
• 2004 - $3,000
• 2005 - $4,000
• 2006 and thereafter - $5,000 (indexed beginning in 2007)

SIMPLE IRA/401(k) Plan Deferrals
 
Deferrals made to savings incentive match plan for employees of small employers (SIMPLE) plans would increase from the current $6,500 (year 2001) annual limit, to

• 2002 - $7,000
• 2003 - $8,000
• 2004 - $9,000
• 2005 and thereafter - $10,000 (indexed beginning in 2006)

SIMPLE Catch-Up Contributions
 
As with other plans, catch-up deferral contributions would also be possible for participants, age 50 or over, in SIMPLE plans, as follows.

• 2002 - $500
• 2003 - $1,000
• 2004 - $1,500
• 2005 - $2,000
• 2005 and thereafter - $2,500 (indexed beginning in 2007)

Qualified Roth Contribution Program
 
Effective for 2006 and thereafter, employees may make after-tax, Roth IRA-like contributions to their employers' 401(k) or 403(b) plans, rather than tax-deferred, with the same benefit of tax-free earnings that is provided by Roth IRAs.
 
Compensation Cap
 
The IRC Sec. 401(a)(17) compensation cap is $200,000 (indexed).
 
IRC Sec. 415 Limit
 
The defined contribution plan annual benefit limit is $40,000, and the corresponding percent-of-compensation limit raised from 25% to 100%.
 
Profit Sharing Plan Contribution/Deduction Limit
 
The employer deduction limit for profit sharing plans has been increased from 15% to 25%. This allows substantially increased annual contributions for employers that use or allow multiple contribution options, such as profit sharing, matching and after-tax contributions.