SPECIAL EDITION

 OCTOBER 19, 2006 OCTOBER 19, 2006 

Retirement News 

for Employers 

Helping Business Owners with Retirement Plans 

Internal Revenue Service Tax Exempt and Government Entities 

National Save for Retirement Week 

On September 13, 2006 the Senate unanimously passed S.R. 550 designating October 22 

through October 28, 2006 as ‘‘National Save for Retirement Week.” The resolution, sponsored 

by Senators Gordon Smith (R-OR) and Kent Conrad (D-ND), supports the goal of increasing 

retirement savings by raising public awareness of the importance of adequate savings and the 

availability of employer sponsored retirement plans. 

The Internal Revenue Service and Department of Labor also support the goal and have 

information and resources to educate business owners about retirement savings options and to 

help them start and operate a retirement plan. 

Why Offer a Retirement Plan? 

Saving through an employer retirement plan is one of the easiest ways for employers and 

employees to save. Starting a retirement plan can be easier than many business owners realize 

and there are plans that will work for all sizes and types of businesses. For example, some plans 

will allow the employer and employees to save more toward retirement, while others have 

minimal paperwork and filing requirements, or allow the employer to vary contributions each 

year. Different types of retirement plans offer different advantages. 

There are a number of reasons why an employer would want to offer a retirement plan. It will 

help attract and retain good employees for the business by offering competitive benefits. 

Offering a retirement plan can provide an employer with important tax advantages. 

Contributions to the plan may be deductible, so less tax may be paid. Employer and employee 

contributions, if permitted by the plan, are not taxed until they are distributed. Finally, the 

earnings on contributions can grow tax-deferred. 

Today, there are more incentives to start and participate in a retirement plan. Recent tax-law 

changes have increased the contribution amounts that are deductible for 401(k) plans and IRAs, 

for example. Participants age 50 or older can save additional amounts to help catch up on their 

savings as they near retirement. 

In addition to being able to deduct contributions, small employers can claim tax credits for the 

cost of setting up certain plans. Tax credits for low and moderate-income savers are available 

based on a person’s adjusted gross income. So, as you can see, saving through a retirement 

plan is a win-win proposition! 
How We Can Help 

The Internal Revenue Service and Department of Labor are committed to working to assist employers and 

service providers by providing publications, web site resources, outreach and telephone assistance to help in 

understanding different plan options and complying with federal retirement plan law. 

The Department of Labor and the IRS developed the publication Choosing a Retirement Solution for 

Your Small Business to help businesses that do not have a retirement plan learn more about the different 

plan options, their key advantages and requirements. In addition, there is more detailed information, including 

what is involved in setting up and operating the specific plans, in these joint Department of Labor/IRS 

publications: 

401(k) Plans for Small Businesses, Publication 4222


SIMPLE IRA Plans for Small Businesses, Publication 4334


SEP Retirement Plans for Small Businesses, Publication 4333 and


Payroll Deduction IRAs for Small Businesses.


These can be found on both the Department of Labor and the IRS web sites. 

The Department of Labor holds seminars to help small businesses and their accountants understand the 

retirement plan options. It also has publications and holds seminars to help employers after they set up a plan 

comply with their fiduciary responsibilities under federal retirement plan law. In addition, the Department of 

Labor has several publications that employers can give to their employees to help them get started saving in 

the plan: Savings Fitness: A Guide to Your Money and Your Financial Future, Top 10 Ways to 

Prepare for Retirement, and Taking The Mystery Out of Retirement Planning. 

The IRS has forms and publications that provide additional information on retirement plans, including: 

Lots of Benefits, Publication 4118 

Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans), Publication 560 

Individual Retirement Arrangements (IRAs), Publication 590 

Individual Retirement Arrangement (IRA) Resource Guide for Small Business Owners and 

Individuals, Publication 4395 

Credit for Small Employers Pension Plan Startup Costs, Form 8881 

Credit for Qualified Retirement Savings Contributions, Form 8880 

These forms and publications, along with additional retirement plan information, can be found on our web 

sites. 

DOL: www.dol.gov/ebsa or call: 1-866-444-EBSA (3272) 

IRS: www.irs.gov/ep or call: 1-800-TAX-FORM (1-800-829-3676) 

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They’re Here: The 2007 Dollar Limitations! 

The 2007 retirement plan dollar limits were released on October 18, 2006. Once again, we’ve gathered 

all the dollar limit numbers and put them on the Retirement Plans Community web page where you’ll 

find the dollar limits starting in 2000 and continuing all the way through 2007. Or, if you just want to see 

the 2007 numbers, click on 2007 COLA News Release.

We have all your favorite limits. You’ll find the deferral limit for 401(k) plans ($15,500) and the section 

401(a)(17) compensation limit ($225,000). The dollar limitation for catch-up contributions for 

individuals aged 50 or over remains unchanged ($5,000 or $2,500, depending on the type of plan). We 

also include - as part of this special offer - some lesser known figures. For example, the chart has the 

compensation amount under section 408(k)(2)(C) for SEPs ($500) and the amount for determining who 

is a “Key Employee” - as defined in Internal Revenue Code section 416 - increased in 2007 from 

$140,000 to $145,000. 

So, if you want to see if your 2007 COLA is flat or bubbly, click on COLATable or go to the 

Retirement Plans Community web page, click on “Published Guidance” and go to “Cost-of-Living 

Adjustment Increases.” 

Please share this Special Edition of the Retirement News for Employers with your friends. 

To subscribe to our newsletter, please go to www.irs.gov/ep . All editions of the Retirement 

News for Employers are archived at www.irs.gov/ep . 

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