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2015 Dollar Limits on Benefits & Compensation for Qualified Retirement Plans, SEPs and SIMPLEs

- October 28, 2014

By Barry R. Milberg

The IRS recently announced the 2015 dollar limits on benefits and compensation for qualified retirement plans, SEPs and SIMPLEs

Increases in the contribution and benefits limits are indexed annually based on cost-of-living adjustments subject to preset minimum increments (except for the Social Security Wage Base).  Each limit applies to different measuring periods as indicated.

Most notable are the defined contribution maximum annual additions limit increase from $52,000 to $53,000, the maximum compensation limit increase from $260,000 to $265,000, the maximum 401(k) deferral limit from $17,500 to $18,000, the maximum 401(k) "catch-up" deferral limit from $5,500 to $6,000, the maximum SIMPLE deferral limit from $12,000 to $12,500, the maximum SIMPLE "catch-up" deferral limit from $2,500 to $3,000, and the Social Security Wage Base increase from $117,000 to $118,500

Commentary  In many instances, the increases in the compensation limit, the 401(k) and "catch-up" limits and the annual additions limit typically translate to increased contributions/benefits for the Key employees and business owners. 

Increase in 2015 as compared to the 2014 limit shown in bold.  Access 2011-2015 limits chart here or via link provided below.

2015 IRS Limits for Qualified Retirement Plans, SEPs and SIMPLEs

 

2015 Limit 

Minimum Increment

for COLA Increase

Applicable

Measuring Period

Defined Contribution

   Annual Additions Limit

 $53,000

$1,000 

Limitation Years

ending in 2015

Defined Benefit

   Annual Benefit Limit

$210,000

$5,000 

Limitation Years

ending in 2015

Social Security

   Taxable Wage Base

$118,500 

 N/A  

For Permitted Disparity,

Plan Years beginning in '15

Qualified Retirement Plan

   Compensation Limit

$265,000 

$5,000 

Plan Years beginning in '15

401(k)/403(b)/457(b)

   Calendar Year Deferral Limit

$18,000 

$500

Calendar Year

SIMPLE Plan

   Calendar Year Deferral Limit

$12,500

$500

Calendar Year

"Catch-up" Limit (age 50+)

   401(k)/403(b)/457

   SIMPLE

$6,000 

$3,000 

$500

Calendar Year

SEP Contribution Eligibility

   Min. Compensation Required

$600 

$50 

Limitation Years

ending in 2015

HCE Definition

   Compensation Test

$120,000 

$5,000 

Look Back Years

beginning in 2014

Top heavy Key EE Definition

 

 

 

   Top Ten Owner Test

N/A

N/A

 

   Officer Test

$170,000 

$5,000 

 Plan Year that includes the 2015 Top Heavy determination date

   1% Owner Test

$150,000 

N/A

2011-2015 IRS Limits on Benefits and Compensation for Qualified Retirement Plans, SEPs and SIMPLEs Chart

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© 2014 ERISA Expertise LLC  All Rights Reserved

The information provided is intended as a general resource, not as investment or retirement planning, or legal plan compliance advice or counsel.  If you consider any actions discussed in this update, we suggest that you consult a qualified planning, tax or ERISA professionalERISA Expertise LLC and Barry R. Milberg do not warrant and are not responsible for any errors and omissions from this update.  Any tax advice included in this written or electronic communication is not intended or written to be used, and it cannot be used, by the taxpayer for the purpose of avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency.

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