Cost-of-Living Index Triggers Changes to IRS Pension Plan Limits for 2015

The Internal Revenue Service recently released the 2015 Pension Plan Limitations, which has a great impact on employers and employees making contributions into pension and other retirement plans. As stated in the release, “Many of the pension limitations will change because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged for 2015.” Employers may see this as an opportunity to review their plan to make modifications in 2015 that produce a positive impact on the plan, and employees may see the opportunity to increase their contributions to better prepare for retirement.

Below are the details of the 2015 limits and how they compare to the limits from 2014:

2014 2015
Elective Deferrals – 401(k), 403(b), and Most 457 Plans $17,500 $18,000
Catch-up Contribution $5,500 $6,000
DC Plan Combined Annual Contribution Limit $52,000 $53,000
Annual Compensation Limit $260,000 $265,000
Highly Compensated Employee Threshold $115,000 $120,000
Top Heavy Key Employee Dollar Limit $170,000 $170,000
SIMPLE Plan Contribution Limit $12,000 $12,500
SIMPLE Plan Catch-up $2,500 $3,000
Defined Benefit Annual Benefit Limit $210,000 $210,000
ESOP Maximum Balance Subject to Five-Year Distribution Rule $1,050,000 $1,070,000
ESOP Amount to Determine Lengthening Five-Year Distribution Period $210,000 $210,000
IRA Contribution Limit $5,500 $5,500
IRA Catch-Up $1,000 $1,000