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October 2003 Bulletin, "New Numbers for 2004: Social Security Factors, IRS Dollar Limits, PBGC Guarantee Limits and Medicare Rates"
Abstract
The Social Security index factors for 2004, indexed according to 2003 growth in the consumer price index (CPI), are reported below:
| Wage Base: a) for Social Security Tax b) for Medicare |
$87,900 No Limit |
| Cost-of-Living Adjustment (COLA) Increase | 2.1% |
| Average Annual Wage | $33,252.09 (for 2002) |
| PIA Formula: a) First Bend Point b) Second Bend Point |
$612 $3,689 |
| Maximum Social Security Benefit For a Worker Retiring at Age 65 and 2 months in 2003 and for a Worker Retiring at age 65 and 4 months in 2004 (Social Security Normal Retirement Age - SSNRA) | $1,825/month |
| Earnings Test - Early Retirement (Age 62) (Amount that Can Be Earned before Benefits Are Cut)* |
$11,640/year** |
| * Under the Senior Citizens' Freedom to Work Act of 2000, people who are covered by Social Security can receive their full benefits once they reach SSNRA (age 65 and 2 mos. In 2003 and age 65 and 4 mos. In 2004) regardless of how much they work and earn. ** The early retirement earnings test is higher in the year of an individual's SSNRA. In 2003, it is $30,720/yr ($2,570/mo) until 2 mos. after a person's 65th birthday. In 2004, it is $31,080/yr ($2,590/mo) until 4 mos. after a person's 65th birthday. |
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Dollar limits for qualified plans and other tax-favored retirement plans for 2004 are noted in the following table:
| Maximum Annual §415 Payout at Age 62 From a Defined Benefit Plan Using EGTRRA's Limit* | $165,000 |
| Maximum Annual Contribution to an Individual's Defined Contribution Account under §415(c) Using EGTRRA's Limit | 41,000 |
| Maximum Elective §401(k) and §403(b) Deferrals Using EGTRRA's Limit | 13,000 |
| §457 Deferral Limit Using EGTRRA's Limit | 13,000 |
| §401(k), §403(b) and Catch-Up Limit for Individuals Age 50 and Older Using EGTRRA's Limit | 3,000 |
| Maximum Amount of Annual Compensation that Can Be Taken into Account for Determining Benefits or Contributions under a Qualified Plan Using EGTRRA's Limit | 205,000 |
| §414(q) Test to Identify Highly Compensated Employees** | 90,000 |
| Compensation Limit under §401(a)(17) for Public Sector Plans that Were Able to Grandfather the Old Dollar Limit** | 305,000 |
| * There are late-retirement adjustments for benefits starting after age 65. **EGTRRA did not change this limit. |
|
The Medicare premium and deductible rates are as follows:
| Part A Deductible | $876 |
| Part B Monthly Premium | $66.60 |
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