IRS, SSA Announce Adjusted Limits for 2015

The IRS and Social Security Administration have issued their cost-of-living adjustments relevant to retirement benefits for 2015.
 
IRS Limits

The IRS on Oct. 23 announced COLAs affecting dollar limitations for pension plans and other retirement-related items for tax year 2015. Some of the limits will change for 2015 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment; others, however, are unchanged because the increase in the index did not meet the thresholds. Highlights include the following:

The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $18,000 from $17,500.

• The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $6,000 from $5,500.
• The limit on annual contributions to an IRA remains unchanged at $5,500. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
• The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $61,000 and $71,000, up from $60,000 and $70,000 in 2014. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $98,000 to $118,000, up from $96,000 to $116,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $183,000 and $193,000, up from $181,000 and $191,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
• The AGI phase-out range for taxpayers making contributions to a Roth IRA is $183,000 to $193,000 for married couples filing jointly, up from $181,000 to $191,000 in 2014. For singles and heads of household, the income phase-out range is $116,000 to $131,000, up from $114,000 to $129,000. For a married individual filing a separate return, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
• The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $61,000 for married couples filing jointly, up from $60,000 in 2014; $45,750 for heads of household, up from $45,000; and $30,500 for married individuals filing separately and for singles, up from $30,000.
• Effective Jan. 1, 2015, the limitation on the annual benefit under a defined benefit plan under Code Section 415(b)(1)(A) remains unchanged at $210,000.
• The limitation for defined contribution plans under Section 415(c)(1)(A) is increased in 2015 to $53,000 from $52,000 in 2014.
• The limitation under Code Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) is increased from to $18,000 from $17,500.
• The annual compensation limit under Code Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased to $265,000 from $260,000.
• The dollar limitation under Code Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan remains unchanged at $170,000.
• The dollar amount under Code Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a five-year distribution period is increased to $1,070,000 from $1,050,000, while the dollar amount used to determine the lengthening of the five-year distribution period remains unchanged at $210,000.
• The limitation used in the definition of highly compensated employee under Code Section 414(q)(1)(B) is increased to $120,000 from $115,000.
• The dollar limitation under Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over is increased to $6,000 from $5,500. The dollar limitation under Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over is increased to $3,000 from $2,500.
• The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost of living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, is increased to $395,000 from $385,000.
• The compensation amount under Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) is increased to $600 from $550.
• The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts is increased to $12,500 from $12,000.
• The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is increased from $17,500 to $18,000.
• The compensation amount under Treas. Reg. §1.61 21(f)(5)(i) concerning the definition of control employee for fringe benefit valuation remains unchanged at $105,000. The compensation amount under Treas. Reg. §1.61 21(f)(5)(iii) is increased to $215,000 from $210,000.
• The dollar amount under Code Section 430(c)(7)(D)(i)(II) used to determine excess employee compensation with respect to a single-employer DB plan for which the special election under Section 430(c)(2)(D) has been made is increased to $1,101,000 from $1,084,000.

Social Security COLA

The Social Security Administration on Oct. 22 announced a 1.7% COLA to Social Security benefits for 2015. These changes will affect the Social Security and Supplemental Security Income benefits of more than 66 million beneficiaries by January 2015. 

Important rates for 2015, compared with those for 2014, are as follows. 

Maximum Amount of Earnings Subject to the Social Security Tax

2015: $118,500
2014: $117,000

Maximum Monthly Social Security Benefit for a Worker Retiring at Full Retirement Age

2015: $2,663 
2014: $2,642

Monthly Social Security Disability Thresholds, Substantial Gainful Activity
 
Non-blind, 2015: $1,090
Non-blind, 2014: $1,070
Blind, 2015: $1,820
Blind, 1014: $1,800