Your Gift from the IRS for 2006: New Limits and Contribution Amounts


Visitors: 2,169

Here are some of the changes in contributions and compensation limits that are in place for 2006:

IRA Contributions:

For those eligible, the 2006 maximum allowable contribution for a traditional IRA is $4000. This is the same for Roth IRA contributions as well. If you are age 50 or over, the “catch up” amount is an additional $1,000.

SEP Provisions:

For plan years beginning in 2006, the maximum compensation limit moves from $210,000 to $220,000

Maximum SEP Contributions for 2006 increase to $44,000 from $42,000, the limit in 2005.

Simple IRA Plans:

The non elective employer contribution wage base is $220,000.

Contribution limits for an employee remain at $10,000.

The “catch-up” provision for employees age 50 and over is $2500. This is up $500 from 2005.

401(k) Contribution Limits:

For 2006 the elective employee contribution is $15,000. This may also be subject to limitations under an employer plan. The “catch-up” provision is $5,000.

Social Security Wage Base: The new wage base is $94,200 up from $92,000 in 2005.

Annual Federal Gift Tax Exclusion:

Generosity increases $1,000 from 2005, with the new 2006 exclusion set at $12,000. In future years, this can again increase for inflation adjustments but only in $1,000 increments. It probably safe to say we won’t be seeing any increases for a while.

Federal Estate Tax Exclusion Amount:

This has moved from $1,500,000 in 2005 to $2,000,000 in 2006 and will remain level through 2008. This is still a hot potato in Washington, and what will eventually happen here is still very much up for grabs.

Glenn “Chip”) Dahlke, a senior contributor to the Living Trust Network, has 28 years in the investment business. He is a Registered Representative of Linsco/Private Ledger and a principal with Dahlke Financial Group. He is licensed to transact securities with persons who are residents of the following states: CA. CT, FL, GA, IL. MA, MD. ME, MI. NC, NH, NJ, NY. OR, PA, RI, VA, VT, WY.

If you have any questions or comments, Chip would love to hear from you. You may contact him by email at . You may also contact him at the Living Trust Network's web site. Its URL is

Copyright 2005. Living Trust Network, LLC. All Rights Reserved.


Article Source:

Rate this Article: 
IRS Tax Debt - Didn't File Your Taxes? IRS Problems Are in Your Future
Rated 4 / 5
based on 5 votes

Related Articles:

IRS Dictates Employee Withholding Amounts

by: Charles Read (July 11, 2006) 

Political Election Campaign Finance Contribution Limits in the 2008 ..

by: R. Sebastian Gibson (October 19, 2008) 
(Legal/Regulatory Compliance)

What The IRS Has in Store for Limits and Contributions in 2007

by: Glenn Dahlke (January 22, 2007) 

How To Keep The IRS Off Your Back And Out Of Your Life In 2006

by: Wayne Davies (December 29, 2005) 

IRS Certifies 2006 Toyota Hybrid for Clean Fuel Deduction

by: Richard Chapo (July 08, 2005) 

Why a Guitar is the Best Christmas Gift for Your Child in 2006

by: Bill McRea (September 30, 2006) 
(Arts and Entertainment)

2006 Graduation Gift Ideas for College Students

by: Natalie Aranda (July 20, 2006) 
(Home and Family)

Owe IRS Tax Debt? Five Tips For Surviving the IRS Collections Process

by: Richard Close (October 01, 2008) 

IRS Tax Debt - How to Remove an IRS Wage Garnishment & Survive This Recession

by: Richard Close (October 01, 2008) 
(Finance/Taxes Relief)

IRS Tax Debt - Didn't File Your Taxes? IRS Problems Are in Your Future

by: Richard Close (October 01, 2008) 
(Finance/Taxes Income)