Using the cost-of living adjustments methods described in the Internal Revenue Code, the Consumer Price Index Unadjusted (CPI-U) for July 2004, and projected CPI-U figures for August, Mercer projects the following key estimates:
- Elective Deferrals for 401(k), 403(b) and 457 plans will increase from $13,000 to $14,000.
- The annual benefit limit will be $170,000 (an increase of $5,000); the annual contribution limit will be $42,000 (an increase of $1,000); the annual compensation limit will be $210,000 (an increase of $5,000).
- The Highly Compensated Threshold will increase $5,000 to $95,000.
- The SIMPLE Plan contribution limit will be $10,000, up $1,000 from a year ago.
- The SEP coverage stays at $450; SEP compensation limit will increase $5,000 to $210,000.
- The Top-Heavy Plan Key Employee Compensation will increase to $135,000, up $5,000.
- Catch-Up Contributions will increase $1,000 to $4,000.
- SIMPLE Plan Catch-Up Contributions will increase $500 to $2,000.
Final values will depend on the CPI-U values for August and September, but Mercer insists that rounding enables them to accurately predict the actual values.
– Kip McDaniel
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