Mercer Releases Projected 2005 IRS Figures

August 18, 2004 ( - Although the Internal Revenue Service (IRS) figures have yet to be released, Mercer Human Resources Consulting has issued estimates for qualified retirement plans for the year 2005.

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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