Benefits and Costs Changing in 2007

Adjustments are made to both government payments and certain benefit costs each year based on the cost of living of the previous year.
Here are some that could affect spending or budget plans in 2007:
• The maximum contribution to 401(k), 403(b), and 457 plans has increased $500 for 2007 to $15,500.
• The “catch-up” contribution for those aged 50 or older remains at $5,000, so that worker can contribute $20,500 max.
• The maximum contribution to an IRA is the lesser of $4,000 or 100 percent of earned income, but anyone 50 or older can contribute an additional $1,000.
• Monthly Social Security retirement and disability benefits will increase 3.3 percent beginning in January.
• The Social Security tax on earned income goes up to $97,500 next year – an increase of $3,300 over 2006. The tax rate of 6.2 percent did not change, nor did the Medicare tax rate, which remains at 1.45 percent.