Payroll and Benefits Dollar Limits for 2015

The calendar may say November, but in the eyes of the government, it’s already time to think about 2015. Every year at about this time, various government agencies start issuing the dollar limits for various amounts that are updated for inflation.

Let’s start with amounts that affect retirement plans:

Item  2015 Limit  2014 Limit
 Social Security Taxable Wage Base   $118,500  $117,000
 401(k) Elective Deferrals $18,000  $17,500
 401(k) Catch Up Contributions*   $6,000 $5,500
 IRA Annual Contribution  $5,500   $5,500
 IRA Catch Up Contributions*  $1,000 $1,000
 Compensation Limit $265,000 $260,000
 SIMPLE Plan Deferrals $12,500 $12,000

*for individuals who will be at least age 50 by the end of the year

This means that a 401(k) participant over age 50 can contribute up to $24,000 per year if the plan allows. There are other government-imposed limitations – the “annual additions limit” covers the maximum amount that can be contributed to a qualified plan (such as a 401(k)) within a year, and that amount is the lesser of 100% of the employee’s compensation or the dollar limit for the year. The annual additions limit for 2015 has been increased to $53,000, up from the 2014 limit of $52,000. This $53,000 limit includes not only the participant’s elective deferrals (of up to $24,000) but also any employer contributions such as a match or profit sharing contribution.

Retirement plans have nondiscrimination rules in place to ensure that rank and file employees are treated fairly. For 2015, an employee whose compensation is at least $120,000 is considered highly compensated (increased from $115,000).

If you contribute to an IRA, you’re aware that there are restrictions on the deductibility of IRA contributions if you’re covered by an employer-sponsored retirement plan. Here are those new numbers:

 

 Traditional IRA Contributions Deductibility is phased out with AGI between: 
 Single & Head of Household    $61,000  $71,000
 Married Filing Jointly (if IRA contributor is also covered by employer plan)  $98,000  $118,000
 Married Filing Jointly (if IRA contributor is not covered by employer plan)  $183,000    $193,000
 Married Filing Separately   $0  $10,000
 Roth IRA Contributions Allowable contribution is phased out with AGI between: 
 Single & Head of Household    $116,000  $131,000
 Married Filing Jointly    $183,000  $193,000
 Married Filing Separately   $0  $10,000

And last but not least, the 2015 limits for health savings accounts were announced earlier this year. An individual with self-only coverage under a high deductible health plan can contribute $3,350, and an individual with family coverage can contribute up to $6,650 (plus an additional $1,000 for ages 55 and older). A “high deductible health plan” is one with an annual deductible of not less than $1,300 for self-only coverage or $2,600 for family coverage. The annual out of pocket expenses (deductibles, co-payments, and other amounts not including premiums) can’t exceed $6,450 for self-only coverage or $12,900 for family coverage.

We’ll keep you posted with any additional updates. In the meantime, please contact us with any questions!