The Internal Revenue Service recently released the new pension limitations for 2014. Now don’t get too excited; nothing changed drastically.
|
Limit |
2014 |
2013 |
| Maximum Annual Pension Benefit |
$210,000 |
$205,000 |
| Maximum Annual Addition (Defined Contribution Plan) |
$52,000 |
51,000 |
| Maximum Elective Deferral (Defined Contribution Plan) |
$17,500 |
$17,500 |
| Catch-up Contribution |
$5,500 |
$5,500 |
| Qualified Plan Compensation Limit |
$260,000 |
$255,000 |
|
|
||
| SEP Minimum Compensation |
$550 |
$550 |
| SEP Maximum Compensation |
$260,000 |
$255,000 |
|
|
||
| SIMPLE Maximum Contributions |
$12,000 |
$12,000 |
| SIMPLE Catch-up Contributions |
$2,500 |
$2,500 |
|
|
||
| Highly Compensated Employee |
$115,000 |
$115,000 |
| Key Employee Compensation |
$170,000 |
$165,000 |
|
|
||
| Taxable Wage Base |
$117,000 |
$113,700 |
Of note is the fact that the annual addition limitation as a percentage of the full compensation limit remains at 20% (i.e. $52,000/$260,000).
Where a non-elective contribution is used to fill the remaining annual addition limitation on a 401(k) enhanced safe harbor matching plan, that contribution as a percentage of pay increases from 9.14% to 9.27% and, therefore, changes the required gateway from 3.04% to 3.08%.
The IRS claims that some limits, namely those governing defined contribution elective deferrals and catch-ups were not changed due to a slow rise in the Consumer Price Index. They stated that the inflation rate was not significant enough to justify an increase for these limits.
For more information on the new pension limitations for 2014, click here.
Any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties under the Internal Revenue Code or applicable state or local tax law provisions.