2003 415 Limits

[DP]

In the ASPA QKA study material, several times it mentions the 415 limit for 2003 is $41,000.

I was surprised to read this. Is the limit not $40,000 for 2003?

[WDIK]

My first thought was catch-up contributions, but for 2003 the catch-up amount is $2,000.

[R. Butler]

Its $40,000 for 2003. When was the material printed? Could they have been projecting $41,000 for 2003?

[DP]

I have the material at home so can't check the printing date. I received it from ASPA only several weeks ago. It is stated as a fact in their material, not as a projected amount.

I also did a Google search this morning and found several websites that say the 415 limit is $41,000 for 2003.

[Belgarath]

I'm puzzled. How did you phrase the Google search? I was interested to see what website would say 41,000, (because it is 40,000) so I tried a Google search myself, and could not find even one site that listed 41,000. Could you provide us with your search terms or a website example?

[Tom Poje]

ah ha. my first response was someone is crazy, but then .....

If my feeble mind recalls correctly, the annual addition limit is an end of year value. (As opposed to compensation limit which is beginning of year value)

If you have a non calendar year plan that begins in 2003 and ends in 2004, then you would use the limit for 2004. And based on the current facts and circumstances, that amount will be 41,000. Perhaps that is what is being referred to - non calendar plan years..

I had posted a spreadsheet somewhere about a month ago that showed how to calculate the value.

[MGB]

The unrounded number for 2003 is 40,636, which is rounded down to the next 1000. That is 40,000.

Given the CPI to date (through August, only September and October are unknown and will not affect these projections unless significant, in multiple percents, deflation or inflation occurs), the numbers for 2004 are:

401(a)(17) 205,000

415(b)(1)(A) 165,000

415©(1)(A) 41,000

414(q)(1)(B) 90,000 (no change)

[DP]

Could you provide us with your search terms or a website

example?

I typed in "415 limit 2003" without the quotes. When the results came up, I did a search within the search for "41,000".

[Belgarath]

Interesting. I checked a couple, and it appears to me that they were simply using an inflation assumption that didn't materialize. But I'm surprised that ASPA published this without at least a caveat (unless there was maybe one that didn't jump out at you?)

[DP]

I checked the ASPA PA-1A Notebook under Lesson 10 - IRS 415 Limits. This is taken directly from their notebook:

Dollar Limit - For limitation years beginning on or after January 1, 2002, the dollar limit is $40,000. Thereafter, this limit will be increased in $1,000 increments each plan year.

There is also a table of dollar limits for each plan year which shows $41,000 for Plan Year End 12/31/2003.

Here is another quote from that same section:

The annual addition limit for the plan year ending December 31, 2003 is the lesser of 100% of compensation or $41,000.

This notebook says it is the 2003 edition.

[Tom Poje]

I looked at the PA-1A (2002) I have - it matches what you say, except on the table for plan year end it also says

'estimate'

regardless, this is sure to be confusing.

maybe it was corrected if there is a 2003 edition out there????

[Tom Poje]

note: the correction for the 2003 PA manual can be found at:

http://www.aspa.org/archivepages/education...pa1a-errata.htm

so, the error has been corrected!

[DP]

Thanks, Tom. I didn't know about this list of corrections to the manual. That will be helpful to me.