The Internal Revenue Service recently announced the 2006 annual cost-of-living adjustments for pension benefits and contributions to retirement plans:
1) The maximum deferral to 401(k) plans will increase from $14,000 in 2005 to $15,000 in 2006;
2) Catch-up contributions under EGTRRA for employees 50 and older will increase from $4,000 to $5,000;
3) The compensation limit under Code Section 401(a)(17) increases from $210,000 in 2005 to $220,000 in 2006;
4) The annual addition contribution limit under Code Section 415 for individuals in 401(k) plans increases from $42,000 in 2005 to $44,000 in 2006;
5) The highly compensated employee limit under Code Section 414(q) is increased from $95,000 in 2005 to $100,000 in 2006;
6) The limit used in determining key employees under Code Section 416 is increased from $135,000 in 2005 to $140,000 in 2006; and
7) The Social Security Wage Base (maximum earnings taxable) for 2006 is $94,200.
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