Retirement plan limitations.The IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. recently announced 2005 retirement plan limitations, www.irs.gov/retirement. Selected limitations are:
2005 2004
Exclusion of elective deferrals regarding Sec. $14,000 $13,000
401(k) and certain other plans [Sec. 402(g)
(1) and (3)]
Defined contribution plan annual addition [Sec. $42,000 $41,000
415(c) (1) (A)]
Defined benefit plan annual benefit [Sec. $170,000 $165,000
415(b) (1) (A)]
Annual compensation limit [Secs. 401(a) (17), $210,000 $205,000
404(l), 408(k)(3) (C) and 408(k) (6) (D) (ii)]
Definition of highly compensated employee [Sec. $95,000 $90,000
414(q) (1) (B)
Dollar limitation for defining key employee in $135,000 $130,000
top-heavy plan [Sec 4416(i) (1) (A) (i)]
Compensation requirement for simplified $450 $450
employee pensions [Sec 408(k) (2) (C)]
Dollar limitation concerning SIMPLE retirement $10,000 $9,000
accounts (Sec. 408(p) (2) (E)]
Limitation on deferrals regarding deferred $14,000 $13,000
compensation plans of state and local
governments and tax-exempt organizations [Sec.
457(e) (15)]
Dollar limitation for catch-up contributions
for individuals aged 50 or over made to:
Applicable employer plans described in Secs. $2,000 $1,500
401(k) (11) or 408(q)
Other applicable employer plans [Sec. 414(v) $4,000 $3,000
(2) (B) (ii) and (i)]
Third-party service providers now include any third-party service provider used by AICPA AICPA See American Institute of Certified Public Accountants (AICPA). members, including independent contractors A person who contracts to do work for another person according to his or her own processes and methods; the contractor is not subject to another's control except for what is specified in a mutually binding agreement for a specific job. used by a CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. firm. Also under the new requirements, AICPA members must inform their clients--preferably in writing and before providing confidential client information to the third-party service provider--that the firm will use a third-party service provider when providing professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. to the client. The new rules also clarify that AICPA members are responsible for all work performed by the service provider. The new rules are effective for professional services performed on or after July 1, 2005, except for services performed pursuant to agreements in existence on June 30, 2005, that are completed by Dec. 31, 2005. Note that California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). rules are more restrictive. The new standards are available at www.aicpa.org/download/ethics/2004_1028_outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. .pdf. |
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