Experiential Wealth, Inc.
Experiential Wealth, Inc.
Experiential Wealth, Inc.

2014 Annual Qualified Retirement Plan Limitations

Nov 1, 2013 | Everything Else, Limits, Plan Sponsors

On October 31, 2013, the Internal Revenue Service announced1 cost of living adjustments affecting dollar limitations for pension plans and other retirement related items for Tax Year 2014. Generally speaking, many of the pension plan limitations increased for 2013 because the rise in the cost-of-living index met the statutory thresholds that trigger their adjustment.

The following is a comparison of the 2013 and 2014 limitations:

Y2013 Y2014
Limit on Elective Deferrals $17,500 $17,500
Highly Compensated Employee Annual Income $115,000 $115,000
Defined Benefit Plan IRC §415 Limit on Benefits $205,000 $210,000
Defined Contribution Plan IRC §415 Dollar Limit $51,000 $52,000
Annual Compensation Limit $255,000 $260,000
Catch-up Contributions Limit for Workers Aged 50 or Older $5,500 $5,500
Key Employee Top Heavy Limit $165,000 $170,000
IRAs  for Individuals 49 and Below 5,500 $5,500
IRAs  for individuals 50 and Older $6,500 $6,500
SIMPLE Retirement Accounts 408(p)(2) $12,000 $12,000

2014 Social Security Adjustments

On October 31, 2013, the Social Security Administration announced2 that there is an increase in the cost of living adjustment (“COLA”).  The Social Security COLA is 1.7% for 2014.  For 2014:

  • The Social Security Taxable wage base will be $117,000 from 113,700.
  • The FICA tax (OASDI and Medicare) payable by both employees and employers remains 7.65% up to the taxable wage base.
  • The 1.45% Medicare tax continues to apply to all earnings.
  • A 0.9% of additional Medicare Tax applies to wages and compensation above a threshold amount received after December 31, 2012 and to self-employment income above a threshold amount received in taxable years beginning after December 31, 2012.3.
  • The Social Security (OASDI) tax, assessed up to the taxable wage base, remains 6.2% for employers and 6.2% for employees4. (The workers’ percentage of the OASDI portion of Social Security taxes for workers was reduced in 2011 is expected to revert back to 6.2% in 2012.)

  1. http://www.irs.gov/Retirement-Plans/COLA-Increases-for-Dollar-Limitations-on-Benefits-and-Contributions
  2. http://www.ssa.gov/pressoffice/pr/2014cola-pr.html
  3. Questions-Answers-for-Additional-Medicare-Tax.pdf
  4. http://www.irs.gov/taxtopics/tc751.html