IRS Issues 2014 Benefits and Contributions Limits
Published:
By Stacey Spencer, QKA and Tim Ayler, CPA | Team Members of the Employee Benefit Services Group
The Internal Revenue Service recently announced the cost-of-living adjustments (COLA) for tax year 2014, that apply to dollar limits for 401(k) and other retirement plans.
Some plan limits will remain unchanged as the increase in the Consumer Price Index did not meet the statutory thresholds for their adjustment, while other limits will rise in 2014.
The announcement highlighted the following:
- 401(k), 403(b) and profit-sharing plan elective deferrals in 2014 will remain at $17,500; the catch-up contribution limit will stay at $5,500.
- The annual defined contribution limit from all sources will increase to $52,000 from $51,000.
- The amount of employee compensation that can be considered in calculating contributions to defined contribution plans will increase to $260,000 from $255,000.
- The limit used in the definition of a highly compensated employee for the purpose of 401(k) nondiscrimination testing remains unchanged at $115,000.
For 2014, following are the annual limits for 401(k), 403(b) and most 457 plans:
| Defined Contribution Plan Limits |
2014 |
2013 |
| Maximum Employee Deferral |
$17,500 |
$17,500 |
| Catch-up Contribution (age 50 and older) |
$5,500 |
$5,500 |
| Defined Contribution Maximum Contribution (employer and employee combined) |
$52,000 |
$51,000 |
| Maximum Annual Compensation Limit |
$260,000 |
$255,000 |
| Annual Compensation of Key Employees in a Top-Heavy Plan |
$170,000 |
$165,000 |
| Annual Compensation of Highly Compensated Employee in a Top-Heavy Plan (HCE threshold) |
$115,000 |
$115,000 |
| Social Security Taxable Wage Base |
$117,000 |
$113,700 |
The limits for SIMPLE and SEP plans are as follows:
| Other Workplace Retirement Plan Limits |
2014 |
2013 |
| SIMPLE employee deferrals |
$12,000 |
$12,000 |
| SIMPLE catch-up deferrals |
$2,500 |
$2,500 |
| SEP minimum compensation |
$550 |
$550 |
| SEP annual compensation limit |
$260,000 |
$255,000 |
The limit on annual contributions to an Individual Retirement Account (IRA) will stay at $5,500. The additional catch-up contribution limit for those ages 50 and over will remain $1,000.
You may visit the IRS Chart of Dollar Limitations on Benefits and Contributions for other amounts.
Contact Information
Stacey Spencer, QKA | Manager, Employee Benefit Services Group | 317-260-4421 | sspencer@greenwaltcpas.com
Tim Ayler, CPA | Partner, Team Member of the Employee Benefit Services Group | 317-260-4401 | Tayler@greenwaltcpas.com