Retirement Plan Contribution Limits Increase Again in 2007!
Here's some good news for the New Year. The amount you can contribute to your supplemental retirement account on a tax-deferred basis will increase in 2007. This is a golden opportunity to boost your savings for retirement while reducing your current taxable income.
For most employees, the maximum before-tax contribution in 2007 is $15,500. If you are age 50 or older in 2007, you can contribute an additional $5,000 before taxes. If you have 15 or more years of service at an eligible institution, you may be able to contribute up to another $3,000 under a special catch up provision ($15,000 lifetime cap).*
Keep in mind the double tax benefit of supplemental retirement plan contributions. First, all of your contributions go into the plan on a before tax basis (federal and most states) so your current tax bill will be reduced. Second, all plan accumulations grow tax deferred so any investment earnings aren't eroded by current income taxes.**
It’s easy to start in the plan or change your contribution amount
To begin making Supplemental Retirement Plan contributions, or if you already participate in the plan and want to change your contribution amount, contact Human Resources at x3006 or x3713 or stop by the Human Resources Office for an enrollment kit. You will need to complete an Enrollment Application and Salary Reduction Agreement to get started.Questions?
If you have questions about your supplemental retirement plans tax-deferral limits, please stop by the Human Resources Office or give us a call.*Distribution may be subject to withdrawal restrictions prior to age 59 ½ and will be subject to ordinary income tax. In addition, a federal 10% additional tax may apply prior to age 59-1/2.
**If you meet both the age 50 and 15-year rule criteria certain ordering rules apply if you contribute less than the maximum. Contributions over the general 402(g) limit will apply first against the $15,000 lifetime limit under the 15 year rule. Contributions in excess of both the general 402(g) limit and 15+ limit are then applied against the age 50 catch-up. There is no lifetime cap on age-based catch-up contributions. This ordering of the catch-ups generally becomes an issue only if you would like to contribute more than $20,500 but less than the combined $23,500 maximum. In this case, the first additional $3,000 contribution would apply to the service-related catch-up and the remainder to the age-based catch-up contribution, thereby reducing your lifetime cap first.
