Many retirement plan dollar limits to increase under 2015 COLAs

The IRS has released the 2015 cost-of-living adjustments to retirement plan limits. Many of the pension plan limitations will change for 2015 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged because the increase in the index did not meet the statutory thresholds.
Employee benefit plans are subject to annually adjusted dollar limitations on benefits, contributions, compensation and other items. Annual benefit limits are generally calculated based on inflation data from the third fiscal quarter of each year. Adjustments in the limits are rounded down and may not take effect until certain minimum dollar amounts are reached.

2015 plan limits

Highlights of the 2015 maximum dollar limitations announced by the IRS include the following:

• Annual defined benefit limit: $210,000, unchanged from 2014;
• Annual defined contribution limit: $53,000, an increase from 2014;
• Annual compensation limit: $265,000, an increase from 2014;
• 401(k) elective deferrals: $18,000, an increase from 2014;
• Annual limit for SIMPLE plans: $12,500, an increase from 2014;
• SEP coverage amount: $600, an increase from 2014; and
• Highly compensated employee limit: $120,000, an increase from 2014.

The AGI limits for maximum IRA contributions for individuals covered by a retirement plan is increased from $96,000 to $98,000 for joint filers, and will increase from $60,000 to $61,000 for heads of household and single filers. The AGI limit for joint filers when only one spouse is covered by a retirement plan will be $183,000, up from $181,000 in 2014.

The contribution amount allowed for Roth IRAs begins to phase out for joint filers with incomes exceeding $183,000, up from $181,000 in 2014, and phases out for singles and heads of households with incomes exceeding $116,000, up from $114,000 in 2014.

The compensation amount under IRS Reg. Sec. 1.61-21(f)(5)(i) concerning the definition of “control employee” for fringe benefit valuation purposes is $105,000, unchanged from 2014. The compensation amount under IRS Reg. Sec. 1.61-21(f)(5)(iii) is increased from $210,000 to $215,000.

Source: IRS News Release IR-2014-99.

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