IRS Announces Employee Benefit Plan Limits for 2015

Overview


In Depth


Recently the Internal Revenue Service (IRS) and the Social Security Administration announced the cost-of-living adjustments to the applicable dollar limits on various employer-sponsored retirement and welfare plans and the Social Security wage base for 2015. The table below compares the applicable dollar limits for certain employee benefit programs and the Social Security wage base for 2014 and 2015.*

 

RETIREMENT PLAN LIMITS 

2015

2014

Annual compensation limit

 $265,000

$260,000

401(k), 403(b) and 457(b) before-tax contributions

 $18,000

$17,500

Catch-up contributions (if age 50 or older)

 $6,000

$5,500

Highly compensated employee threshold

 $120,000

$115,000

Key employee officer compensation threshold

 $170,000

$170,000

Defined benefit plan annual benefit and accrual limit

 $210,000

$210,000

Defined contribution plan annual contribution limit

 $53,000

$52,000

Employee stock ownership plan (ESOP) limit for determining the lengthening of the general five-year distribution period

 $210,000

$210,00

ESOP limit for determining the maximum account balance subject to the general five-year distribution period

 $1,070,000

$1,050,000

HEALTH AND WELFARE PLAN LIMITS
High Deductible Health Plans (HDHP) and Health Savings Accounts (HSA)
HDHP – Maximum Annual Out-of-Pocket Limit (excluding premiums):
Self-only coverage

 $6,450

$6,350

Family coverage

 $12,900

$12,700

HDHP – Minimum Annual Deductible:
Self-only coverage

 $1,300

$1,250

Family coverage

 $2,600

$2,500

HSA – Annual Contribution Limit:
Self-only coverage

 $3,350

$3,300

Family coverage

 $6,650

$6,550

Catch-up contributions (age 55 or older)

 $1,000

$1,000

SOCIAL SECURITY WAGE BASE

 $118,500

$117,000

 

Plan sponsors should update payroll and plan administration systems for the 2015 cost-of-living adjustments and should incorporate the new limits in relevant participant communications, like open enrollment materials and summary plan descriptions.

For further information about applying the new IRS employee benefit plan limits for 2015, contact your regular McDermott lawyer or one of the authors.

* The dollar limits are generally applied on a calendar year basis; however, certain dollar limits are applied on a plan-year, tax-year, or limitation-year basis.