Summary of Retirement Plan Tax Changes

IRA Contribution Limits Increased:

2002-2003	$3,000
2005-2007	$4,000
2008	$5,000

Catch-up contributions for tax payers over age 50 (an additional contribution allowed):

2002-2004	$ 500
2006	$1,000

401K & 403B Deferral Limits Increased:

2002	$11,000
2003	$12,000
2004	$13,000
2005	$14,000
2006	$15,000
2007 and later Inflation Adj. in $500 increments.

SIMPLE plans:

2002	$ 7,000
2003	$ 8,000
2004	$ 9,000
2005	$10,000

Catch-up contributions to 401K, 403B and SIMPLE plans allowed for tax payers age 50 and over as follows:

2002	$1,000
2003	$2,000
2004	$3,000
2005	$4,000
2006 & after	$5,000

From 2002 through 2006 lower-income tax payers will be eligible for a nonrefundable credit for contributions to certain retirement plans. The qualifying plans are IRAs (both traditional and Roth), 401K elective contributions, Sec. 457 plans, SIMPLE or SEP plans, and voluntary after tax employee contributions to qualified retirement plans.

After 2005, 401K or 403B annuity plans will be allowed to include a “qualified Roth contribution program.” This would allow the taxpayer to designate a portion of their elective deferral as a Roth contribution. This portion of their deferral would be taxed to them currently. The distributions from this portion of their program would be entirely tax free.