For 2004, the maximum annual benefit for a participant under a defined benefit plan increases to the lesser of the following amounts:

• 100% of the participant's average compensation for his or her highest three consecutive calendar years; or
• $165,000 (subject to cost-of-living increases after 2004).

For 2004, a defined contribution plan's maximum annual contribution, plus other additions (excluding earnings) to the account of a participant, increases to the lesser of the following amounts:

• 100% of the compensation actually paid to the participant; or
• $41,000 (subject to cost-of-living increases after 2004).

401(k) Plans
The limit on elective deferrals for participants in 401(k) plans is $13,000 in 2004 ($14,000 in 2005). If you are age 50 or older by the end of the year, you can contribute an additional $3,000 ($4,000 IN 2005).

Savings Incentive Match Plans for Employees (SIMPLE Plans)
The limit on salary reduction contributions to a SIMPLE plan is $9,000 for 2004 ($10,000 in 2005). A SIMPLE plan can permit participants who are age 50 or older, at the end of the calendar year, to make additional catch-up contributions of $1,500 ($2,000 in 2005). SIMPLE plans must be established by October 1 in order to make contributions for the year.

Simplified Employee Pensions (SEPs)
The maximum deduction for contributions to a SEP for 2004 remains at 25% of the compensation paid or accrued during the year to eligible employees participating in the plan. The maximum combined deduction for a participant's elective deferrals and other SEP business contributions increases to $41,000.

For 2004, the annual limit on the amount of employer contributions to a SEP increases to the lesser of the following amounts:

• 25% of an eligible employee's compensation; or
• $41,000 (subject to cost-of-living adjustments after 2004).

For 2004, the maximum amount of an employee's compensation you can consider when figuring SEP contributions (including elective deferrals) and the deduction for contributions increases to $205,000. You can establish and fund a SEP plan up until the due date (including extensions) of your tax return.

Section 403(b) Plans
For 2004, the limit on elective deferrals is $13,000. The limit on elective deferrals will increase by $1,000 each year through 2006. The limit on annual additions for 2004 increases to the lesser of $41,000 or your includible compensation for your most recent year of service. If you are age 50 or older by the end of the year, you may be permitted to make additional catch-up contributions of up to $3,000 to your 403(b) plan.