Some retirement plan dollar limits to increase under 2014 COLAs

The IRS has released the 2014 cost-of-living adjustments to retirement plan limits. Some pension limitations, such as those governing 401(k) plans and IRAs, will remain unchanged because the increase in the Consumer Price Index did not meet the statutory thresholds for their adjustment. However, other pension limits will increase for 2014.

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.

2014 plan limits

Highlights of the 2014 maximum dollar limitations announced by the IRS include the following:

• Annual defined benefit limit: $210,000, an increase from 2013;

• Annual defined contribution limit: $52,000, an increase from 2013;

• Annual compensation limit: $260,000, an increase from 2013;

• 401(k) elective deferrals: $17,500, unchanged from 2013;

• Annual limit for SIMPLE plans: $12,000, unchanged from 2013;

• SEP coverage amount: $550, unchanged from 2013; and

• Highly compensated employee limit: $115,000, unchanged from 2013.

The AGI limits for maximum IRA contributions for individuals covered by a retirement plan is increased from $95,000 to $96,000 for joint filers, and will increase from $59,000 to $60,000 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 $181,000, up from $178,000 in 2013.

The contribution amount allowed for Roth IRAs begins to phase out for joint filers with incomes exceeding $181,000, up from $178,000 in 2013, and phases out for singles and heads of households with incomes exceeding $114,000, up from $112,000 in 2013.

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, up from $100,000 in 2013. The compensation amount under IRS Reg. Sec. 1.61-21(f)(5)(iii) is increased from $205,000 to $210,000.

Source: IRS News Release IR-2013-86.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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