IRS Announces 2015 Cost-of-Living Adjustments for Retirement Plans

The IRS recently announced cost of living adjustments for 2015.  The key dollar amounts for retirement plans (compared to the 2014 dollar limits) are noted below.

Maximum Qualified Retirement Plan   Dollar Limits

2015

2014

Limit   on Section 401(k) deferrals (Section 402(g))

$18,000

$17,500

Dollar   limitation for catch-up contributions (Section 414(v)(2)(B)(i))

$6,000

$5,500

Limit   on deferrals for government and tax-exempt organization deferred compensation   plans (Section 457(e)(15))

$18,000

$17,500

Annual   benefit limitation for a defined benefit plan (Section 415(b)(1)(A))

$210,000

$210,000

Limitation   on annual contributions to a defined contribution plan (Section 415(c)(1)(A))

$53,000

$52,000

Limitation   on compensation that may be considered by qualified retirement plans (Section   401(a)(17))

$265,000

$260,000

Dollar   amount for the definition of highly compensated employee (Section   414(q)(1)(B))

$120,000

$115,000

Dollar   amount for the definition of key employee in a top-heavy plan (Section   416(i)(1)(A)(i))

$170,000

$170,000

Dollar   amount for determining the maximum account balance in an ESOP subject to a   five-year distribution period (Section 409(o)(1)(C)(ii))

$1,070,000

$1,050,000

SIMPLE   retirement account limitation (Section 408(p)(2)(E))

$12,500

$12,000

Social   Security Taxable Wage Base

$118,500

$117,000

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Pre-Approved Plan Sponsors are Starting to Contact Adopting Employers

Many employers adopt defined contribution retirement plans that have been pre-approved by the IRS.  Plan sponsors of pre-approved plans submit the plans to the IRS to obtain approval of whether the form of the plan meets the requirements of Internal Revenue Code Section 401.  These pre-approved plans are often referred to as “volume submitter plans” or “master and prototype plans.”   An adopting employer of a pre-approved plan must then adopt the plan within a two-year period announced by the IRS.  The adoption period for the latest round of pre-approved defined contribution plans is open from May 1, 2014 to April 30, 2016. Read More ›

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Harkin Unveils USA Retirement Funds Act

Senator Tom Harkin (D-IA) recently unveiled his plan to improve the private retirement system.  Senator Harkin’s proposal was the third recent proposal targeting retirement plan savings.  President Obama introduced his myRA program during the State of the Union address and Senator Susan Collins (R-ME) and Senator Bill Nelson (D-FL) introduced the Retirement Security Act of 2014 on January 29.

Senator Harkin’s bill, the Universal, Secure, and Adaptable (USA) Retirement Funds Act of 2014 (“USA Retirement Funds”), proposes to offer payroll deductions, particularly to workers who do not have access to employer-provided retirement plans.  Under Senator Harkin’s bill, workers would be automatically enrolled in the program at six percent of pay and could contribute up to $10,000 pre-tax per year.  Read More ›

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