IRS Announces 2015 Pension and Related Limitations

Submitted by Firm:
Bond, Schoeneck & King, PLLC
Firm Contacts:
Louis P. DiLorenzo, Thomas G. Eron
Article Type:
Legal Update

The Internal Revenue Service recently announced the dollar limitations for pension plans and other items beginning January 1, 2015. Some of the limits are listed below.





Maximum Annual Compensation taken into account for determining benefits or contributions to a qualified plan

$260,000 $265,000

Basic Elective Deferral Limitation for 401(k), 403(b) and 457(b) Plans

$17,500 $18,000

Catch-up Contribution Limit for Persons Age 50 and older in 401(k), 403(b) or SARSEP Plans

$5,500 $6,000

Limitation on Annual Additions to a Defined Contribution Plan1

$52,000 $53,000

Limitation on Annual Benefits from a Defined Benefit Plan2

$210,000 $210,000

Highly Compensated Employee Compensation Threshold3

$115,000 $120,000

SEP Compensation Threshold

$550 $600

Social Security Taxable Wage Base for Social Security Tax (6.2%) For Medicare Tax (1.45% / 2.35%)

No Limit
No Limit

Health Savings Accounts:


• Individual Contribution Limit
• Family Contribution Limit
• Catch-Up Contributions



Health Flexible Spending Accounts4

$2,500 $2,550


Important Amendment Reminders

The Internal Revenue Service (IRS) is currently accepting determination letter applications for individually-designed qualified retirement plans that are considered "Cycle D" filers under the determination letter application program maintained by the IRS. In general, an individually-designed qualified retirement plan is considered a Cycle D filer if the plan sponsor’s federal employer identification number ends in a "4" or a "9" (although certain special rules apply for governmental plans, multiemployer plans, multiple employer plans, and plans maintained by multiple members of the same controlled group that may require or permit a different filing cycle). The deadline for submitting Cycle D plans to the IRS for a determination letter is January 31, 2015. Therefore, Cycle D filers should be taking steps now to amend their individually-designed qualified retirement plans to reflect applicable legal requirements in preparation for the submission of those plans to the IRS for a determination letter.

For all tax-favored retirement plans (regardless of filing cycle), December 31, 2014 is the deadline for making any necessary plan amendments to conform to the IRS’s guidance on retirement plan definitions of "spouse." (See IRS Notice 2014-19.) As a result of the Supreme Court’s decision in United States v. Windsor, a tax-favored retirement plan is generally required to treat the same-sex spouse of a participant in the same manner as the plan would treat an opposite sex spouse. Plan documents need to be reviewed, and amended if necessary, to incorporate the IRS guidance. The amendment deadline is December 31, 2014.

1 In no event may annual additions exceed 100% of a participant’s compensation.

2 In no event may a participant’s annual benefit exceed 100% of the participant’s average compensation for the participant’s high three years.

3 Generally, an employee is considered "highly compensated" if the employee:
(a) was a five-percent owner of the employer at any time during the current or preceding year; or
(b) received compensation from the employer in the preceding year of more than the applicable dollar limit for that year.

4 This limit applies only to voluntary employee salary reduction (pre-tax) contributions.