The IRS has announced the new dollar limits for contributions and benefits in retirement and certain deferred compensation plans for 2015. The new limits are the result of the application of statutory cost-of-living adjustments (“COLAs”). We have set out a chart summarizing the key limits below, including how they compare to those in prior years.
Since plans generally incorporate COLAs by reference, no plan document amendments should be required in most cases on account of the 2015 limit increases. However, plans that are established or restated in 2015, and SPDs that are required to be updated in 2015, should reflect the updated dollar amounts.
In addition, plan sponsors may wish to communicate some of these changes to employees before the end of 2014. For example, to help ensure that employees maximize their tax-deferred savings opportunities in the coming year, it may be advisable to inform them of the increase to the limit on elective deferral contributions to 401(k), 403(b) and 457(b) plans from $17,500 to $18,000. Many employees may have elected to make the maximum deferral amount applying the 2014 limit, and they may wish to make corresponding adjustments before the new year.
Summary of Key Dollar Limits for Employee Benefit Plans
Click here to view the table.