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 for a SEP moves from $210,000 to $220,000
Maximum SEP Contributions for 2006 increases to $44,000 from $42,000, the limit in 2005.
Simple IRA Plans:
The non-elective employer contribution wage base is $220,000 for 2006.
The 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 to a 401(k) plan is $15,000. This may also be subject to certain limitations that are imposed under an employer plan. The “catch-up” provision for 401(k) plans in 2006 is $5,000.
Social Security Wage Base: The new social security 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:
The federal estate tax exclusion amount has moved from $1,500,000 in 2005 to $2,000,000 in 2006 and the exclusion amount will remain level through 2008. This whole issue of federal estate taxes is still a hot potato in Washington, and what will eventually happen here is still very much up for grabs.
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