Retirement plan limitations.

The IRS 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 members, including independent contractors used by a CPA 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 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 rules are more restrictive.

The new standards are available at www.aicpa.org/download/ethics/2004_1028_outsourcing.pdf.