2004 ira limit contribution

CONFORMITY ESTIMATES FOR EDUCATION, IRA, AND PENSION ISSUES (12/10/01 ) Enactment assumed after June 30, 2002 ACT SECTION AFFECTED PROVISION EFFECTIVE FOOTNOTES TAX 2002-03 2003-04 2004-05 Education Provisions 401 402 Education IRAs - increase annual contribution amount to $2,000 Qualified tuition plans - tax free distributions tyba 12/31/01 tyba 12/31/01 b/ c/ b/ PIT PIT negl. loss baseline loss -$0.5 -$1 Individual Retirement Arrangement Provisions 601 Modifying IRA Contribution Limits - increase the maximum contribution limit for traditional and Roth IRAs to: $3,000 in 2002 through 2004, $4,000 in 2005 through 2007, and $5,000 in 2008; index in years thereafter IRA Catch-up Contributions - increase maximum contribution limits for traditional and Roth IRAs for individuals age 50 or older by $500 in 2002 and $1,000 in 2006 Deemed IRAs under employee plans tyba 12/31/01 b/ c/ PIT -$8 -$8 -$12 601 602 tyba 12/31/01 pyba 12/31/02 b/ c/ PIT PIT -$1 --- -$1 negl. effect -$1 negl. effect Provisions for Expanding Coverage 611 Increase limitation on exclusion for elective deferrals to: $11,000 in 2002, $12,000 in 2003, $13,000 in 2004, $14,000 in 2005, and $15,000 in 2006; index thereafter Increase limitation on SIMPLE elective contributions to: $7,000 in 2002, $8,000 in 2003, $9,000 in 2004, and $10,000 in 2005; index thereafter Increase defined benefit dollar limit to $160,000 Lower early retirement age to 62; lower normal retirement age to 65 Increase annual addition limitation for defined contribution plans to $40,000 with indexing in $1,000 increments yba 12/31/01 a/ b/ c/ PIT -$2 -$10 -$16 611 611 611 611 yba 12/31/01 yba 12/31/01 yba 12/31/01 yba 12/31/01 b/ a/ b/ a/ b/ a/ b/ PIT PIT PIT PIT -$1 -$1 baseline loss negl. effect -$1 -$2 negl. effect -$1 negl. effect -$1 Page 1 of 5 CONFORMITY ESTIMATES FOR EDUCATION, IRA, AND PENSION ISSUES (12/10/01 ) Enactment assumed after June 30, 2002 ACT SECTION 611 AFFECTED PROVISION EFFECTIVE FOOTNOTES TAX 2002-03 Increase qualified plan compensation limit to $200,000 with indexing in $5,000 increments and expand availability of qualified plans to self-employed individuals who are exempt from the selfemployment tax by reason of their religious beliefs 2003-04 2004-05 yba 12/31/01and tyba 12/31/01 a/ b/ PIT -$5 -$4 -$5 611 Increase limits on deferrals under deferred compensation plans of State and local governments and tax-exempt organizations to: $11,000 in 2002, $12,000 in 2003, $13,000 in 2004, $14,000 in 2005, and $15,000 in 2006; index thereafter 612 613 614 615 Plan loans for S corporation owners, partners, and sole proprietors Modify top-heavy rules Elective deferrals not taken into account for purposes of deduction limits Repeal of coordination requirements for deferred compensation plans of State and local governments and tax-exempt organizations Definition of compensation for puropses of deduction limit 616 617 Option to treat elective deferrals as after-tax Roth contributions 618 619 Nonrefundable credit to certain individuals for elective deferrals and IRA contributions (sunset 12/31/06) Small business (100 or fewer employees) tax credit for new retirement plan expenses - first 3 years of the plan yba 12/31/05 tyba 12/31/01 qualified plans established after 12/31/01 --n/a n/a --n/a n/a --n/a n/a Increase stock bonus and profit sharing plan deduction limit from 15% to 25% yba 12/31/01 yba 12/31/01 yba 12/31/01 yba 12/31/01 b/ c/ PIT Both Both Both -$3 n/a minor loss -$4 -$3 n/a minor loss -$3 -$3 n/a minor loss -$3 a/ b/ a/ b/ c/ yba 12/31/01 yba 12/31/01 tyba 12/31/01 b/ a/ a/ b/ PIT Corp Both -$1 negl. loss -$1 -$1 negl. loss -$1 -$1 negl. loss -$1 616 Page 2 of 5 CONFORMITY ESTIMATES FOR EDUCATION, IRA, AND PENSION ISSUES (12/10/01 ) Enactment assumed after June 30, 2002 ACT SECTION 620 AFFECTED PROVISION Eliminate user fee for certain requests regarding small employer pension plans with at least one non-highly compensated employee Treatment of nonresident aliens engaged in international transportation services EFFECTIVE FOOTNOTES TAX 2002-03 2003-04 2004-05 rma 12/31/01 tyba 12/31/01 n/a n/a n/a n/a n/a n/a 621 Provisions for Enhancing Fairness for Women 631 Additional catch-up contributions for individuals age 50 or older increase the otherwise applicable contribution limit for all plans other than SIMPLE by $1,000 in 2002, $2,000 in 2003, $3,000 in 2004, $4,000 in 2005, and $5,000 in 2006; SIMPLE plan catchups would be 50% of that applicable to other plans; (nondiscrimination rules would not apply) 632 633 634 635 636 637 Equitable treatment for contributions of employees to defined contribution plans Faster vesting of certain employer matching contributions Simplify and update the minimum distribution rules by modifying post-death distribution rules Clarify tax treatment of division of section 457 plan benefits upon divorce Modify safe harbor relief for hardship withdrawals from 401(k) plans Waiver of tax on nondeductible contributions for domestic or similar workers tyba 12/31/01 yba 12/31/01 cf pyba 12/31/01 yba 12/31/01 tdapma 12/31/01 yba 12/31/01 tyba 12/31/01 a/ b/ c/ a/ b/ c/ a/ b/ PIT PIT PIT PIT PIT -$10 -$4 negl. loss -$7 -$3 negl. loss negl. baseline loss negl. effect negl. effect -$5 -$3 negl. loss a/ PIT n/a n/a n/a Provisions for Increasing Portability for Participants 641 642 Rollovers allowed among governmental section 457 plans, section 403(b) plans, and qualified plans Rollovers of IRAs to workplace retirement plans da 12/31/01 da 12/31/01 a/ b/ a/ b/ PIT PIT minor loss negligible loss negl. effect negligible loss Page 3 of 5 CONFORMITY ESTIMATES FOR EDUCATION, IRA, AND PENSION ISSUES (12/10/01 ) Enactment assumed after June 30, 2002 ACT SECTION 643 644 645 646 647 648 649 AFFECTED PROVISION Rollovers of after-tax retirement plan contributions Waiver of 60-day rule Treatment of forms of qualified plan distributions Rationalization of restrictions on distributions Purchase of service credit in governmental defined benefit plans Employers may disregard rollovers for cash-out amounts Minimum distribution and inclusion requirements for section 457 plans EFFECTIVE dma 12/31/01 da 12/31/01 yba 12/31/01 da 12/31/01 ta 12/31/01 da 12/31/01 da 12/31/01 FOOTNOTES a/ b/ a/ b/ a/ a/ b/ a/ b/ b/ TAX 2002-03 PIT PIT PIT PIT PIT PIT 2003-04 negl. effect negl. effect negl. effect negl. effect negl. effect negl. effect considered in other provisions 2004-05 Provisions for Strengthening Pension Security and Enforcement 651/652 653 654 654 655 656 Phase-in repeal of 160% of current liability funding limit; extend maximum deduction rule Excise tax relief for sound pension funding Repeal 100% of compensation limit for multi-employer plans Modify section 415 aggregation rules for multi-employer plans Investment of employee contributions in 401(k) plans Prohibited allocations of stock in an ESOP S corporation pyba 12/31/01 yba 12/31/01 yba 12/31/01 tyba 12/31/01 aiii TRA '97 plan years after 12/31/01 dma frap yea DOE pateo/a DOE a/ b/ a/ b/ a/ b/ Corp Corp Corp Corp -$1 n/a negl. loss negl. loss n/a negligible gain --n/a -$1 n/a negl. loss negl. loss n/a negligible gain negligible loss baseline loss n/a -$1 n/a negl. loss negl. loss n/a minor gain a/ a/ Corp Corp Corp 657 658 659 Automatic rollovers of certain mandatory distributions Clarify treatment of contributions to multi-employer plans Notice of significant reduction in plan benefit accruals -$1 n/a Provisions for Reducing Regulatory Burdens 661 662 Modify timing of plan valuations ESOP dividends may be reinvested without loss of dividend deduction pyba 12/31/01 tyba 12/31/01 a/ a/ Corp -$2 baseline loss -$2 -$2 Page 4 of 5 CONFORMITY ESTIMATES FOR EDUCATION, IRA, AND PENSION ISSUES (12/10/01 ) Enactment assumed after June 30, 2002 ACT SECTION 663 664 665 666 AFFECTED PROVISION Repeal transition rule relating to certain highly compensated employees Employees of tax-exempt entities Treatment of employer-provided retirement advice Repeal of multiple use test EFFECTIVE FOOTNOTES TAX 2002-03 pyba 12/31/01 DOE yba 12/31/01 yba 12/31/01 negl. loss 2003-04 2004-05 negl. loss negl. loss negl. effect negl. effect considered in other provisions Total NOTE: Details may not add to totals due to rounding. -$44 -$48 -$59 a/ = ERISA implications b/ = Without conforming legislation, existing plans potentially could be disqualified. c/ = Baseline implication. Baseline revenue losses for eduction, IRA, and pension issues total ($ 40, $40, $60) million for FY 2002-3, 2003-4, 2004-5 and 2004-05. aii TRA '97 = as if included in the Taxpayer Relief Act of 1997 da = distributions after cf = contributions for dma = distributions made after DOE = date of enactment frap = Federal regulations are prescribed pateo/a = plan amendments taking effect on or after PIT = Personal Income Tax pyba = plan years beginning after rma = requests made after ta = transfers after tdapma = transfers, distributions, and payments made after tyba = taxable years beginning after yba = years beginning after yea = years ending after Corp = Corporation Franchise and Income Tax Page 5 of 5