There is good news for physicians in the retirement plan area.  Cost-of-living adjustments increased the maximum allowable pension and/or profit sharing plan annual contribution from $40,000 to $41,000 for plan years beginning in 2004.  The annual compensation limit has also increased from $200,000 to $205,000 effective with plan years beginning in 2004.  For many physician groups, these changes will mean that the practice can contribute $41,000 in 2004 for the physicians and a slightly lower percentage for the staff than it contributed in 2003.

       For those of you with 401(k) plans, the annual elective deferral limit for 2004 is $13,000, and if you are at least age 50 by the end of the plan year, an additional “catch-up” 401(k) contribution is allowed up to $3,000 in 2004.

       Finally, you must remember not to distribute any retirement plan funds to a terminated participant or directly to an IRA without having the participant and his or her spouse signing the appropriate distribution papers.  Twenty percent (20%) tax withholding is required for a taxable distribution and a Form 1099R must be issued for all distributions and rollovers.