IRS Announces 2014 Pension Plan Limitations

The Internal Revenue Service announced on Thursday cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2014. Some limits will remain unchanged in 2014 because the increase in the Consumer Price Index did not meet the statutory thresholds for their adjustment. However, other pension plan limitations will increase for 2014. Highlights include:

• Elective Deferral. The elective deferral limit for employees who participate in 401(k), 403(b) and most 457 plans remains unchanged at $17,500.

• Catch-Up. The catch-up contribution limit for employees age 50 and over who participate in 401(k), 403(b) and governmental 457 plans remains unchanged at $5,500.

• Annual Defined Contribution Limit. The limitation for defined contribution plans increased from $51,000 to $52,000

• Annual Compensation Limit. The compensation limit increased from $255,000 to $260,000

• HCEs. The threshold for identifying highly compensated employees is $115,000, the same as in 2013.

• Key Employees. The threshold for identifying key employees for purposes of top-heavy testing increased from $165,000 to $170,000.

• Wage Base. The Social Security taxable wage base is $117,000 in 2014, up from $113,700 this year. (The wage base is determined by the Social Security Administration, not the IRS.)

If additional questions arise, please contact your senior consultant at BPC. Additional charts and resources can be found here.

Posted on November 5, 2013 .