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.
|
LIMITATION
|
2014 AMOUNT
|
2015 AMOUNT
|
|
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%)
|
$117,000
No Limit |
$118,500
No Limit |
|
Health Savings Accounts:
|
|
|
|
|
• Individual Contribution Limit
• Family Contribution Limit
• Catch-Up Contributions
|
$3,300
$6,550
$1,000
|
$3,350
$6,650
$1,000
|
|
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.