April 24, 2019

April 24, 2019

Subscribe to Latest Legal News and Analysis

April 23, 2019

Subscribe to Latest Legal News and Analysis

April 22, 2019

Subscribe to Latest Legal News and Analysis

2015 Cost of Living Adjustments for Retirement Plans

The Internal Revenue Service recently announced its cost-of-living adjustments applicable to dollar limitations for retirement plans and Social Security generally effective for Tax Year 2015 (see IR-2014-99). Most notably, the limitation on annual salary deferrals into a 401(k) plan will increase from $17,500 to $18,000. The dollar limits are as follows:

 

LIMIT

 

2014

 

2015

401(k)/403(b) Elective Deferral Limit (IRC § 402(g))
The annual limit on an employee's elective deferrals to a 401(k) or 403(b) plan made through salary reduction.

 

$17,500

 

$18,000

Government/Tax Exempt Deferral Limit (IRC § 457(e)(15))
The annual limit on an employee's elective deferrals concerning Section 457 deferred compensation plans of state and local governments and tax-exempt organizations.

 

$17,500

 

$18,000

401(k)/403(b)/457 Catch-up Limit (IRC § 414(v)(2)(B)(i))
In addition to the regular limit on elective deferrals described above, employees over the age of 50 generally can make an additional "catch-up" contribution not to exceed this limit.

 

$5,500

 

$6,000

Defined Contribution Plan Limit (IRC § 415(c))
The limitation for annual contributions to a defined contribution plan (such as a 401(k) plan or profit sharing plan).

 

$52,000

 

$53,000

Defined Benefit Plan Limit (IRC § 415(b))The limitation on the annual benefits from a defined benefit plan.

 

$260,000
($385,000 for certain gov’t plans)

 

$265,000
($395,000 for certain gov’t plans)

Highly Compensated Employee Threshold (IRC § 414(q))
The definition of an HCE includes a compensation threshold for the prior year. A retirement plan’s discrimination testing is based on coverage and benefits for HCEs.

 

$115,000
(for 2015 HCE determination)

 

$120,000
(for 2016 HCE determination)

Key Employee Compensation Threshold (IRC § 416)
The definition of a key employee includes a compensation threshold. Key employees must be determined for purposes of applying the top-heavy rules. Generally, a plan is top-heavy if the plan benefits of key employees exceed 60% of the aggregate plan benefits of all employees.

 

$170,000

 

$170,000

SEP Minimum Compensation Limit (IRC § 408(k)(2)(C))
The mandatory participation requirements for a simplified employee pension (SEP) includes this minimum compensation threshold.

 

$550

 

$600

SIMPLE Employee Contribution (IRC § 408(p)(2)(E))
The limitation on deferrals to a SIMPLE retirement account.

 

$12,000

 

$12,500

SIMPLE Catch-up Limit (IRC § 414(v)(2)(B)(ii)))
The maximum amount of catch-up contributions that individuals age 50 or over may make to a SIMPLE retirement account or SIMPLE 401(k) plan.

 

$2,500

 

$3,000

Social Security Taxable Wage Base

 

$117,000

 

$118,500

         
Jackson Lewis P.C. © 2019

TRENDING LEGAL ANALYSIS


About this Author

Keith A. Dropkin, Jackson Lewis, welfare benefit plans lawyer, payroll taxes attorney
Principal

Keith Dropkin is a Principal in the White Plains, New York, office of Jackson Lewis P.C.

Mr. Dropkin counsels clients regarding various benefit issues including fiduciary duty obligations, corrections under the DOL and IRS compliance programs, the drafting and design of pension and welfare benefit plans, payroll taxes and those issues arising in mergers and acquisitions. He has represented clients ranging from self-employed individuals to Fortune Top 50 companies. Mr. Dropkin speaks and writes regularly about employee...

(914) 872-8060
 Joy M. Napier-Joyce, Employment Benefits Attorney, Jackson Lewis Law Firm, ERISA
Office Managing Principal

Joy M. Napier-Joyce is the Office Managing Principal of the Baltimore, Maryland, office of Jackson Lewis P.C. She also leads the firm’s Employee Benefits Practice Group.

Ms. Napier-Joyce counsels clients in a broad range of benefit matters, including general compliance and administration of qualified retirement plans under ERISA and the Internal Revenue Code. She also assists clients with welfare plan issues involving cafeteria plans, health plans, flexible spending accounts, group insurance products, COBRA and HIPAA. Ms. Napier-Joyce has a particular focus on assisting employers with the various compliance requirements associated with federal health care reform, and has been a frequent speaker on the topic. Her practice also includes advice on non-qualified deferred compensation arrangements and other executive compensation matters, including issues related to compliance with Section 409A of the Internal Revenue Code.

410-415-2000
Bruce H. Schwartz, Employee Benefits Attorney, Jackson Lewis Law firm
Shareholder

Bruce Schwartz is a Principal in the White Plains, New York, office of Jackson Lewis P.C. He has more than 30 years of experience in all aspects of employee benefits and compensation counseling and is one the founders of the Firm’s Benefits Practice Group.

Mr. Schwartz’s practice encompasses virtually all areas of employee benefits law and federal tax law matters relating to benefits and compensation, including the following:

  • design, implementation and operation of tax-qualified retirement plans including 401(k), profit-sharing, stock...
914-872-6905