New Benefit Limits for 2006

• For defined benefit plans, the limitation on the annual benefit is increased from $170,000 to $175,000.  The annual addition limitation for defined contribution plans is increased from $42,000 to $44,000.
• The annual compensation limit on maximum compensation that may be considered is increased from $210,000 to $220,000.  The dollar limitation for a key employee in a top-heavy plan is increased from $135,000 to $140,000.
• For employee stock ownership plans, the dollar amount for determining the maximum account balance subject to a 5-year distribution period is increased from $850,000 to $885,000, while the dollar amount used to determine the lengthening of the 5-year distribution period changes from $170,000 to $175,000.
• The limitation used in the definition of highly compensated employee is increased from $95,000 to $100,000.

The annual compensation limitation for eligible participants in certain governmental plans that allowed cost-of-living adjustments to the compensation limitation under the plan to be taken into account is increased from $315,000 to $325,000.

The $10,000 limitation for SIMPLE retirement accounts and the $450 compensation amount for simplified employee pensions (SEPs) remain unchanged.

In addition, certain retirement plan limits are scheduled by law to increase in 2006.  They are as follows:

• The limitation on the exclusion for elective deferrals, which applies to 401(k) plans and  403(b) annuities, is increased from $14,000 to $15,000.  The limitation on deferrals under Code Section 457 deferred compensation plans of state and local governments and tax-exempt organizations is increased from $14,000 to $15,000.