The Internal Revenue Service (IRS) recently announced cost-of-living adjustments to the applicable dollar limits on various employer-sponsored retirement and welfare plans for 2014. Although many dollar limits currently in effect for 2013 will change, some limits will remain unchanged for 2014. This On the Subject provides a chart of these 2014 cost-of-living changes.
Recently the Internal Revenue Service (IRS) announced the cost-of-living adjustments to the applicable dollar limits on various employer-sponsored retirement and welfare plans for 2014. Although many dollar limits currently in effect for 2013 will change, some limits will remain unchanged for 2014. The table below compares the applicable dollar limits for 2013 and 2014 for certain employee benefit programs.*
|
RETIREMENT PLAN LIMITS |
2014 |
2013 |
|
Annual compensation limit |
$260,000 |
$255,000 |
|
401(k), 403(b) & 457(b) before-tax contributions |
$17,500 |
$17,500 |
|
Catch-up contributions (if age 50 or older) |
$5,500 |
$5,500 |
|
Highly compensated employee threshold |
$115,000 |
$115,000 |
|
Key employee officer compensation threshold |
$170,000 |
$165,000 |
|
Defined benefit plan annual benefit and accrual limit |
$210,000 |
$205,000 |
|
Defined contribution plan annual contribution limit |
$52,000 |
$51,000 |
|
Employee stock ownership plan (ESOP) limit for determining the lengthening of the general five-year distribution period |
$210,000 |
$205,000 |
|
ESOP limit for determining the maximum account balance subject to the general five-year distribution period |
$1,050,000 |
$1,035,000 |
|
|
|
|
|
HEALTH AND WELFARE PLAN LIMITS |
|
|
|
Health Flexible Spending Accounts |
|
|
|
Maximum salary reduction limit |
$2,500 |
$2,500 |
|
|
|
|
|
High Deductible Health Plans (HDHP) and Health Savings Accounts (HSA) |
|
|
|
HDHP – Maximum annual out-of-pocket limit (excluding premiums) |
|
|
|
Self-only coverage |
$6,350 |
$6,250 |
|
Family coverage |
$12,700 |
$12,500 |
|
HDHP – Minimum annual deductible |
|
|
|
Self-only coverage |
$1,250 |
$1,250 |
|
Family coverage |
$2,500 |
$2,500 |
|
HSA – Annual contribution limit |
|
|
|
Self-only coverage |
$3,300 |
$3,250 |
|
Family coverage |
$6,550 |
$6,450 |
|
Catch-up contributions (age 55 or older) |
$1,000 |
$1,000 |
Plan sponsors should update payroll and plan administration systems for the 2014 cost-of-living adjustments and should incorporate the new limits in relevant participant communications, including open enrollment materials and summary plan descriptions.
For further information about applying the new IRS employee benefit plan limits for 2014, contact your regular McDermott lawyer or one of the contacts listed to the right.
*The dollar limits are generally applied on a calendar-year basis; however, certain dollar limits are applied on a plan-year, tax-year or limitation-year basis.
P>The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.