The IRS released the 2015 Cost of Living Adjustments for various limitations affecting retirement plans on October 23, 2014. The changes affect both qualified retirement plan and IRA contributions and benefits. Highlights of the 2015 adjustments include:
- Maximum 401(k) contribution is increased to $18,000, and the catch-up limit (age 50+) is increased to $6,000, a total of $24,000 for seniors.
- Maximum Profit Sharing Plan contribution is increased to $53,000.
- Maximum Compensation that is considered to determine contributions and benefits is increased to $265,000.
- Maximum IRA Deduction remains $5,500 + catch-up of $1,000 ($6,500 for seniors). Deduction for participants in an employer plan is reduced based on AGI. The AGI threshold is increased $1,000 for singles, and $2,000 for married couples, which allows the full deduction with AGI up to $61,000 for singles, and $183,000 for married couples
Other limitations that have significant impact on contributions and benefits have also been increased. A more detailed description may be found in the tables below.
2015 Qualified Plan Cost of Living Adjustments
| Description | Code Section | 2015 |
| Maximum Annual Payout from a Defined Benefit Plan | 415(b)(1)(A) | $210,000 |
| Maximum Annual Contribution to a Defined Contribution Plan
|
415(c)(1)(A) | $53,000 |
| Maximum Elective Deferrals under §401(k) and §403(b) Plans
|
402(g) | $18,000 |
| Catch-up Contributions age 50 (401(k) & 403(b) Plans) | 414(v)(2)(B)(i) | $6,000 |
| Catch-up Contributions age 50 (SIMPLE Plan) | 414(v)(2)(B)(ii) | $3,000 |
| Maximum Annual Compensation Taken into Account for Benefits and Contributions under a Qualified Plan | 401(a)(17) | $265,000 |
| Compensation Test – Highly Compensated Employee | 414(q) | $120,000 |
| Compensation Test – Key Employee (Top Heavy) | 416(i)(1) | $170,000 |
| Government and Tax-Exempt Plans Deferral Limit | 457(e)(15) | $18,000 |
| Maximum contribution to SIMPLE Retirement Account
|
408(p)(2) | $12,500 |
| Social Security Integration Level (Contribution and Benefit Base under §230 of Social Security Act) | 401(l)(5) | $118,500 |
2015 Cost of Living Adjustment to IRA Limitations
| Description | Code Section | 2015 |
| Maximum Deductible IRA Contribution | 219(b)(1)(A) | $5,500 |
| Catch-up IRA Contributions age 50 or over | 219(b)(5)(B) | $1,000 |
| Maximum Roth IRA Contribution
contribution is reduced for AGI>
|
408A(c)(2)(A) | $5,500 |
| Roth AGI threshold for married couples
|
408A(c)(3)(c)(B)(ii) | $183,000 |
| Roth IRA AGI threshold for all others | 408A(c)(3)(c)(B)(ii) | $116,000 |
| Maximum contribution to SEP – lesser of 25% of Compensation or
|
415(c)(1)(A) | $53,000 |
| Minimum compensation for SEP coverage | 408(k)(2) | $600 |
| Maximum compensation for SEP | 408(k)(3) | $265,000 |
THE DEDUCTIBLE CONTRIBUTION LIMIT IS REDUCED FOR ACTIVE PARTICIPANTS IN AN EMPLOYER SPONSORED RETIREMENT PLAN, BASED ON THE CONTRIBUTOR’S AGI. (Table below) In the case of married taxpayers filing jointly, if one spouse is an active participant, the reduction in the maximum contribution limit is calculated separately for the participant spouse and non-participant spouse.
| Reduced Deduction for Active Participant in Employer Sponsored Plan | ||||
| Deduction
|
Single | Married | Filing Separately | |
| Full
$5,500 or $6,500 for Seniors |
Not an active participant | No active participant | Non active participant
< $183,000 Active participant(s) < $98,000
|
N/A |
| Partial | Active participant phase-out $61,000 to $71,000 | Non-active participant
phase-out $183,000 to $193,000 |
Active participant(s)
phase-out $98,000 to $118,000 |
phase-out
$0 to $10,000 |
| None | Active participant AGI over $71,000 | Non active participant
> $193,000 |
Active participant(s)
> $118,000 |
AGI over $10,000 |
For more information call or e-mail Jeff Bragdon: 412-454-0233, jbragdon@williamscoulson.com
or Mike Lloyd: 412-454-0225, mlloyd@williamscoulson.com.