The Internal Revenue Service (IRS) has just released the cost-of-living adjustments (COLAs) employers will need to administer their retirement and pension plans properly in the coming year.
As they are every year, most of the adjustments are made based on the U.S. Consumer Price Index (a.k.a., the Cost of Living Index).
Many of the contribution limits haven’t changed since 2013, so you’ll want to remind staffers to take a look at the new figures if they want to max out their retirement savings.
Here’s where the notable limits stand for 2015:
- 401(k), 403(b) and 457 contribution maximums will increase to $18,000 (from $17,500 last year)
- Catch-up contributions for those plans jump to $6,000 (from $5,500)
- Total contribution limit for defined-contribution plans jumps to $53,000 (from $52,000)
- Maximum compensation limit for defined-contribution plans increases to $265,000 (from $260,000) and to $395,000 for certain government plans (from $385,000)
- Highly compensated employee earning threshold jumps to $120,000 (from $115,000)
- Key employee compensation threshold will remain at $170,000
- Limit on annual individual retirement account (IRA) contributions will remain capped at $5,500
- IRA catch-up contribution limit will remain at $1,000
- Maximum compensation limit for defined-benefit plans will remain at $120,000
- Compensation minimum for simplified employee pensions (SEP) will increases to $600 (from $550)
- Savings incentive match plan for employees (SIMPLE) contribution limit will increase to $12,500, and
- SIMPLE catch-up contribution limit will jump to $3,000 (from $2,500).
Info: IRS Release IR-2014-99.