IRS sets retirement plan cost of living adjustments for 2015
Contribution limits climb for 401(k)s but not for IRAs
Employees will be able contribute more to their defined contribution plans in tax year 2015, thanks to cost-of-living adjustments announced Thursday by the Internal Revenue Service.
Contribution limits for employees participating in 401(k), 403(b), most 457 plans and the federal government’s $400 billion Thrift Savings Plan will rise to $18,000 from $17,500. Employees aged 50 and over will be able to contribute an additional $6,000, up from the current $5,500 limit.
The limitation on the annual benefit under a defined benefit plan remains unchanged at $210,000, while the limitation for defined contribution plans increased to $53,000 from $52,000. The definition of a highly compensated employee increased to $120,000 from $115,000.
For employee stock ownership plans, the maximum account balance subject to a five-year distribution period increased to $1.07 million from $1.05 million, the IRS said.
Limits on contributions to individual retirement accounts remain unchanged because the statutory thresholds that trigger cost-of-living adjustments were not met. Income limits for tax deductions related to IRA and Roth IRA contributions were raised to adjust for inflation.
(Hazel Bradford is a reporter at sister publication Pensions & Investments)
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