Publication 553 - Highlights Of 2003 Tax Changes - Department Of The Treasury Page 17
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$165,000 (subject to cost-of-living increases after
More information. For more information about 403(b)
2004).
plans, see Publication 571, Tax-Sheltered Annuity Plans
(403(b) Plans).
For 2004, a defined contribution plan’s maximum annual
contributions and other additions (excluding earnings) to
the account of a participant increases to the lesser of the
following amounts.
•
4.
100% of the compensation actually paid to the par-
ticipant.
•
$41,000 (subject to cost-of-living increases after
Exempt Organizations
2004).
Simplified Employee Pensions (SEPs)
2003 Change
The following changes apply to SEPs. For more informa-
tion on SEPs, see Publication 560, Retirement Plans for
Report of Contributions
Small Business.
and Expenditures
Deduction limit increases. The maximum deduction for
contributions to a SEP for 2004 remains unchanged at
Organizations required to file Form 8872, Political Organi-
25% of the compensation paid or accrued during the year
zation Report of Contributions and Expenditures, before
to your eligible employees participating in the plan. How-
June 30, 2003, could have filed the form electronically or
ever, the maximum combined deduction for a participant’s
by mail. Returns filed on or after that date must be filed
elective deferrals and other SEP contributions increases to
electronically if the organization expects to have contribu-
$41,000.
tions or expenditures that are more than $50,000.
Contribution limit Increases. For 2004, the annual limit
on the amount of employer contributions to a SEP in-
creases to the lesser of the following amounts.
•
5.
25% of an eligible employee’s compensation.
•
$41,000 (subject to cost of living adjustments after
2004).
Estate and Gift Taxes
Compensation limit increases. For 2004, the maximum
amount of an employee’s compensation you can consider
when figuring SEP contributions (including elective defer-
2003 Changes
rals) and the deduction for contributions increases to
$205,000.
Estate Tax Applicable
403(b) Plan Changes
Exclusion Amount Increased
Increase in the limit on elective deferrals. For 2004, the
An estate tax return for a U.S. citizen or resident needs to
limit on elective deferrals increases from $12,000 to
be filed only if the gross estate exceeds the applicable
$13,000. The limit on elective deferrals will increase by
exclusion amount for the year of death, listed below.
$1,000 each year through 2006.
Exclusion
Increase in the limit on annual additions. For 2004, the
Year
Amount
limit on annual additions increases to the lesser of
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,000,000
$41,000, or your includible compensation for your most
2004 and 2005 . . . . . . . . . . . . . . . . . . . . . . .
1,500,000
recent year of service. In 2003 your limit on annual addi-
2006, 2007, and 2008 . . . . . . . . . . . . . . . . . .
2,000,000
tions is the lesser of $40,000 or your includible compensa-
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,500,000
tion for your most recent year of service.
Annual Exclusion for Gifts Increased
Catch-up contributions. For 2004, if you are age 50 or
older by the end of the year, you may be permitted to make
The annual exclusion for gifts made to spouses who are
additional catch-up contributions of up to $3,000 to your
403(b) plan.
not U.S. citizens increased to $112,000.
Chapter 5 Estate and Gift Taxes
Page 17
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