IRS Announces 2015 Pension Plan Amounts

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The 2015 limit on the exclusion for elective deferrals described in Section 402(g)(3) for Section 401(k)-type plans, Section 403(b) plans and Section 457 increases to $18,000 from $17,500, the Internal Revenue Service said Oct. 23 (IR-2014-99). The catch-up contribution for those 50 and older rises to $6,000 from $5,500.

Most other pension plan limits increased, the IRS said.

For 2015, the limit for defined-contribution plans under Section 415(c)(1)(A) rises to $53,000 from $52,000. The general definition of a highly compensated employee increased to $120,000 from $115,000. The definition of a key employee in a top-heavy plan remains unchanged at $170,000. The limited compensation amount under Treasury Regulations and Internal Revenue Code Section 1.61-21(f)(5)(iii) increases to $215,000 from $210,000 and the general annual qualified plan compensation limit rises to $265,000 from $260,000, the IRS said.

The definition of a “control employee” for fringe benefit valuation purposes under I.R.C. Section 1.61-21(f)(5)(iii) is unchanged at $105,000.

Separately, on Oct. 22, the Social Security Administration released the Old-Age, Survivors and Disability Insurance (OASDI) taxable wage base for 2015, which increases to $118,500 from $117,000 in 2014. This information was included in a previous Bloomberg BNA e-mail to subscribers.

The maximum 2015 OASDI portion of the Federal Insurance Contributions Act tax payable by each employee is $7,347, or 6.2 percent of the wage base. Employers match the employee amount with an equal contribution.

Of the 165 million workers who are to pay Social Security taxes in 2015, about 10 million would pay higher taxes because of the higher taxable wage base, SSA said.

For the Medicare (HI) portion of the FICA taxes, there is no wage base and all wages earned are subject to the HI tax, which also is paid by employers and employees. Each pays at a 1.45 percent rate, although employees pay an additional 0.9 percent on wages greater than $200,000.

The agency also said a 1.7 percent cost-of-living increase amount is to take effect, affecting several thresholds for benefits and coverage. The Social Security tax annual coverage threshold amount for domestic employees for 2015 remains at $1,900 and remains at $1,600 for election workers.