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Pension Plan Adjustments for 2015
Notice 2014-70; 2014-48 IRB 905
2015 Limitations Adjusted As Provided in Section 415(d), etc.1
Section 415 of the Internal Revenue Code (the Code) provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost-of-living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under § 415. Under § 415(d), the adjustments are to be made under adjustment procedures similar to those used to adjust benefit amounts under § 215(i)(2)(A) of the Social Security Act.
Effective January 1, 2015, the limitation on the annual benefit under a defined benefit plan under § 415(b)(1)(A) remains unchanged at $210,000.
For a participant who separated from service before January 1, 2015, the participant's limitation under a defined benefit plan under § 415(b)(1)(B) is computed by multiplying the participant's compensation limitation, as adjusted through 2014, by 1.0178.
The limitation for defined contribution plans under § 415(c)(1)(A) is increased in 2015 from $52,000 to $53,000.
The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of § 415(b)(1)(A). After taking into account the applicable rounding rules, the amounts for 2015 are as follows:
The limitation under § 402(g)(1) on the exclusion for elective deferrals described in § 402(g)(3) is increased from $17,500 to $18,000.
The annual compensation limit under §§ 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $260,000 to $265,000.
The dollar limitation under § 416(i)(1) (A)(i) concerning the definition of key employee in a top-heavy plan remains unchanged at $170,000.
The dollar amount under § 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5-year distribution period is increased from $1,050,000 to $1,070,000, while the dollar amount used to determine the lengthening of the 5-year distribution period remains unchanged at $210,000.
The limitation used in the definition of highly compensated employee under § 414(q)(1)(B) is increased from $115,000 to $120,000.
The dollar limitation under § 414(v)(2) (B)(i) for catch-up contributions to an applicable employer plan other than a plan described in § 401(k)(11) or 408(p) for individuals aged 50 or over is increased from $5,500 to $6,000. The dollar limitation under § 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in § 401(k)(11) or 408(p) for individuals aged 50 or over is increased from $2,500 to $3,000.
The annual compensation limitation under § 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost-of-living adjustments to the compensation limitation under the plan under § 401(a)(17) to be taken into account, is increased from $385,000 to $395,000.
The compensation amount under § 408(k)(2)(C) regarding simplified employee pensions (SEPs) is increased from $550 to $600.
The limitation under § 408(p)(2)(E) regarding SIMPLE retirement accounts is increased from $12,000 to $12,500.
The limitation on deferrals under § 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is increased from $17,500 to $18,000.
The compensation amounts under § 1.61-21(f)(5)(i) of the Income Tax Regulations concerning the definition of "control employee" for fringe benefit valuation purposes remains unchanged at $105,000. The compensation amount under § 1.61-21(f)(5)(iii) is increased from $210,000 to $215,000.
The Code also provides that several retirement-related amounts are to be adjusted using the cost-of-living adjustment under § 1(f)(3). After taking the applicable rounding rules into account, the amounts for 2015 are as follows:
The adjusted gross income limitation under § 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing a joint return is increased from $36,000 to $36,500; the limitation under § 25B(b)(1)(B) is increased from $39,000 to $39,500; and the limitation under §§ 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $60,000 to $61,000.
The adjusted gross income limitation under § 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing as head of household is increased from $27,000 to $27,375; the limitation under § 25B(b)(1)(B) is increased from $29,250 to $29,625; and the limitation under §§ 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $45,000 to $45,750.
The adjusted gross income limitation under § 25B(b)(1)(A) for determining the retirement savings contribution credit for all other taxpayers is increased from $18,000 to $18,250; the limitation under § 25B(b)(1)(B) is increased from $19,500 to $19,750; and the limitation under §§ 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $30,000 to $30,500.
The deductible amount under § 219(b) (5)(A) for an individual making qualified retirement contributions remains unchanged at $5,500.
The applicable dollar amount under § 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased from $96,000 to $98,000. The applicable dollar amount under § 219(g)(3)(B)(ii) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $60,000 to $61,000. The applicable dollar amount under § 219(g)(3)(B)(iii) for a married individual filing a separate return is not subject to the annual cost-of-living adjustment and remains $0. The applicable dollar amount under § 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $181,000 to $183,000.
The adjusted gross income limitation under § 408A(c)(3)(B)(ii)(I) for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow( er) is increased from $181,000 to $183,000. The adjusted gross income limitation under § 408A(c)(3)(B)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $114,000 to $116,000. The applicable dollar amount under § 408A(c) (3)(B)(ii)(III) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0.
The dollar amount under § 430(c)(7)(D) (i)(II) used to determine excess employee compensation with respect to a single-employer defined benefit pension plan for which the special election under § 430(c)(2)(D) has been made is increased from $1,084,000 to $1,101,000.
The principal author of this notice is John Heil of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding the data in this notice, please contact the Employee Plans' taxpayer assistance telephone service at 1-877-829-5500 (a toll-free number) between the hours of 8:30 a.m. and 4:30 p.m. Eastern time Monday through Friday. For information regarding the methodology used in arriving at the data in this notice, please e-mail Mr. Heil at [email protected].
2015 Limitations Adjusted As Provided in Section 415(d), etc.1
Section 415 of the Internal Revenue Code (the Code) provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost-of-living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under § 415. Under § 415(d), the adjustments are to be made under adjustment procedures similar to those used to adjust benefit amounts under § 215(i)(2)(A) of the Social Security Act.
Cost-of-Living Adjusted Limits 2015
Effective January 1, 2015, the limitation on the annual benefit under a defined benefit plan under § 415(b)(1)(A) remains unchanged at $210,000.
For a participant who separated from service before January 1, 2015, the participant's limitation under a defined benefit plan under § 415(b)(1)(B) is computed by multiplying the participant's compensation limitation, as adjusted through 2014, by 1.0178.
The limitation for defined contribution plans under § 415(c)(1)(A) is increased in 2015 from $52,000 to $53,000.
The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of § 415(b)(1)(A). After taking into account the applicable rounding rules, the amounts for 2015 are as follows:
The limitation under § 402(g)(1) on the exclusion for elective deferrals described in § 402(g)(3) is increased from $17,500 to $18,000.
The annual compensation limit under §§ 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $260,000 to $265,000.
The dollar limitation under § 416(i)(1) (A)(i) concerning the definition of key employee in a top-heavy plan remains unchanged at $170,000.
The dollar amount under § 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5-year distribution period is increased from $1,050,000 to $1,070,000, while the dollar amount used to determine the lengthening of the 5-year distribution period remains unchanged at $210,000.
The limitation used in the definition of highly compensated employee under § 414(q)(1)(B) is increased from $115,000 to $120,000.
The dollar limitation under § 414(v)(2) (B)(i) for catch-up contributions to an applicable employer plan other than a plan described in § 401(k)(11) or 408(p) for individuals aged 50 or over is increased from $5,500 to $6,000. The dollar limitation under § 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in § 401(k)(11) or 408(p) for individuals aged 50 or over is increased from $2,500 to $3,000.
The annual compensation limitation under § 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost-of-living adjustments to the compensation limitation under the plan under § 401(a)(17) to be taken into account, is increased from $385,000 to $395,000.
The compensation amount under § 408(k)(2)(C) regarding simplified employee pensions (SEPs) is increased from $550 to $600.
The limitation under § 408(p)(2)(E) regarding SIMPLE retirement accounts is increased from $12,000 to $12,500.
The limitation on deferrals under § 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is increased from $17,500 to $18,000.
The compensation amounts under § 1.61-21(f)(5)(i) of the Income Tax Regulations concerning the definition of "control employee" for fringe benefit valuation purposes remains unchanged at $105,000. The compensation amount under § 1.61-21(f)(5)(iii) is increased from $210,000 to $215,000.
The Code also provides that several retirement-related amounts are to be adjusted using the cost-of-living adjustment under § 1(f)(3). After taking the applicable rounding rules into account, the amounts for 2015 are as follows:
The adjusted gross income limitation under § 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing a joint return is increased from $36,000 to $36,500; the limitation under § 25B(b)(1)(B) is increased from $39,000 to $39,500; and the limitation under §§ 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $60,000 to $61,000.
The adjusted gross income limitation under § 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing as head of household is increased from $27,000 to $27,375; the limitation under § 25B(b)(1)(B) is increased from $29,250 to $29,625; and the limitation under §§ 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $45,000 to $45,750.
The adjusted gross income limitation under § 25B(b)(1)(A) for determining the retirement savings contribution credit for all other taxpayers is increased from $18,000 to $18,250; the limitation under § 25B(b)(1)(B) is increased from $19,500 to $19,750; and the limitation under §§ 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $30,000 to $30,500.
The deductible amount under § 219(b) (5)(A) for an individual making qualified retirement contributions remains unchanged at $5,500.
The applicable dollar amount under § 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased from $96,000 to $98,000. The applicable dollar amount under § 219(g)(3)(B)(ii) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $60,000 to $61,000. The applicable dollar amount under § 219(g)(3)(B)(iii) for a married individual filing a separate return is not subject to the annual cost-of-living adjustment and remains $0. The applicable dollar amount under § 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $181,000 to $183,000.
The adjusted gross income limitation under § 408A(c)(3)(B)(ii)(I) for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow( er) is increased from $181,000 to $183,000. The adjusted gross income limitation under § 408A(c)(3)(B)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $114,000 to $116,000. The applicable dollar amount under § 408A(c) (3)(B)(ii)(III) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0.
The dollar amount under § 430(c)(7)(D) (i)(II) used to determine excess employee compensation with respect to a single-employer defined benefit pension plan for which the special election under § 430(c)(2)(D) has been made is increased from $1,084,000 to $1,101,000.
Drafting Information
The principal author of this notice is John Heil of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding the data in this notice, please contact the Employee Plans' taxpayer assistance telephone service at 1-877-829-5500 (a toll-free number) between the hours of 8:30 a.m. and 4:30 p.m. Eastern time Monday through Friday. For information regarding the methodology used in arriving at the data in this notice, please e-mail Mr. Heil at [email protected].
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