Yesterday, the IRS announced Cost-of-living adjustments (COLAs) that will favorably affect certain dollar limitations and other retirement-related provisions for most 401(k), 403(b), 457, and Pension Plans. In general, the limitations will change beginning in 2015.
The employee contribution limit for so-called Section 401(k), 403(b), most Section 457 plans and federal government Thrift Savings Plan, increased to $18,000 per year for $17,500 in 2014. For those aged 50 or over, the catch-up limit is increased to $6,000 from $5,500. The adjusted gross income (AGI) phase-out range for taxpayers making contributions to an IRA or a Roth IRA has also increased, as have the AGI phase-out ranges for the retirement savings contributions credit.
The maximum contribution limitation for each employee from the combined employer and employee contributions for each employee is increased for 2015 to $53,000 from $52,000. There are transitional rules for participants who separate from service prior to 2015 as well as increases in other limit affecting the calculation includable wages.
Please contact us or call one of our tax professionals for further discussion of how these changes may affect you or your business.