Do your Highly Compensated Employees (HCEs) and owners want to know what the maximum they can contribute to their retirement plan is? If so, here are some cost-of-living changes for 2015 that you should be aware of. The Internal Revenue Service recently announced cost-of–living adjustments affecting dollar limitations for pension plans and other retirement related items for tax year 2015.

Highlights include the following:

  • The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), and most 457 plans is increased from $17,500 to $18,000. Also the catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), and most 457 plans, is increased from $5,500 to $6,000.
  • The limitation of defined contribution plans under section 415 is increased in 2015 from $52,000 to $53,000.
  • The annual compensation limit for defined contribution plans is increased from $260,000 to $265,000.
  • As a plan sponsor you should communicate the new 2015 401k deferral limits to all your plan participants and make sure you adjust the 401k deferral amounts that go through your payroll service.
  • Also the 2015 $1,000 limitation increase from $52,000 to a total of $53,000 and the increase in annual compensation limit for 2015 from $260,000 to $265,000 will potentially have an increase in the total employer contribution expense for 2015.

DS&B can do an estimated contribution calculation for 2015 for your retirement plan, so that you can see how these changes to the limitations amounts effects your retirement plan contribution expense.


Disclaimer: All content provided in this article is for informational purposes only, and is subject to change. Contact a DS+B professional before using or acting on any information provided in this article