IRS Announces 2015 Retirement Plan Contribution Limits

Source: ThinkHR.com

On October 23, 2014 the Treasury Department announced cost-of-living adjustments affecting dollar limitations for pension plans and retirement accounts for tax year 2015. The following is a summary of the changes that impact employees:

401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plans

  • The elective deferral (contribution) limit increased from $17,500 to $18,000.
  • The catch-up contribution limit for employees aged 50 and over who participate in these plans increased from $5,500 to $6,000.

Individual Retirement Arrangements (IRAs)

  • The limit on annual contributions remains unchanged at $5,500.
  • The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

Simplified Employee Pension (SEP) IRAs and Individual/Solo 401(k)s

  • Elective deferrals increase from $52,000 in 2014 to $53,000 in 2015, based on an increased annual compensation limit of $265,000, up from $260,000 in 2014.
  • The minimum compensation that may be required for participation in a SEP increases from $550 in 2014 to $600 in 2015.

SIMPLE (Savings Incentive Match Plan for Employees) IRAs

  • The contribution limit on SIMPLE IRA retirement accounts for 2015 is $12,500, up from $12,000 in 2014.
  • The SIMPLE catch-up limit is $3,000, up from $2,500 in 2014.

Defined Benefit Plans

  • The basic limitation on the annual benefits under a defined benefit plan is unchanged at $210,000.

Other Changes

  • Highly-compensated and key employee thresholds: The threshold for determining “highly compensated employees” increases from $115,000 to $120,000 in 2015; the threshold for officers who are “key employees” remains at $170,000 for 2015.
  • Social Security Cost of Living Announcement: In a separate announcement, the Social Security Administration increased the Taxable Wage Base from $117,000 in 2014 to $118,500.
    • The maximum “Old Age, Survivor and Disability Insurance” (OASDI) tax will be $7,347 for both employers and employees; and
    • Hospitalization Insurance (Medicare) tax continues to apply to all wages.

The IRS pension plan limits announcement with more details is available here.
The Social Security Administration Fact Sheet outlining the 2015 changes can be found here.

 

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