New Pension Bill - Retirement Savings

The new law would repeal the sunset provisions in EGTRRA that apply to retirement savings. Long-range retirement planning would be enhanced by making these provisions permanent. The major EGTRRA retirement provisions that would be made permanent rather than sunset at the end of 2010 would include:

**Permanent higher dollar amount for IRA contributions ($4,000 starting in 2006, $5,000 in 2008, inflation adjusted thereafter);

**Permanent higher dollar limits on defined contribution plans ($44,000 in 2006), elective deferrals (including $15,000 in 2006 for Code Sec. 401(k) plan deferrals), Code Sec. 457 plan deferrals ($15,000 in 2006), SIMPLE plan contributions ($10,000 in 2006) and compensation that may be taken into account under a plan;

**Permanent increases in the annual benefit limit under a defined benefit plan ($175,000 for 2006);

**Permanent catch-up contributions for older workers ($1,000 after 2005 for IRAs, $2,500 for SIMPLE plans, $5,000 for Code Sec. 401(k) plans);

**Permanent higher deductible amounts for employer contributions to employee retirement plans (inflation-adjusted to $220,000 in 2006; 25% compensation deduction limit for stock bonus and profit-sharing plans).