By Mary Ellen Schill
May 19, 2014
On October 31 the IRS announced the various contribution and benefit limits applicable to qualified retirement plans, for 2014. Here’s a link to our recent update which includes a handy chart. We’ve become accustomed to getting these annual announcements in mid-October, but as with a lot of other IRS guidance, the government shutdown did have an effect.
The IRS limits announced yesterday are annually adjusted for cost-of-living increases (and decreases if necessary). How often and how much of an increase is implemented depends on the particular section of the tax code which is implicated. For example, the IRS limit on elective deferrals (employee pre-tax contributions) to a 401(k) plan can only be changed per the statute in $500 increments, and if the cost of living change doesn’t warrant a full $500 adjustment, then there is no change. This was the case for 2014, so, the elective deferral limit for 2014 is the same as for 2013, $17,500.
The Social Security Administration also announced this week the taxable wage base for 2014. The new taxable wage base will be $117,000. The taxable wage base is the amount of earnings which are subject to FICA taxes for the year.
Payroll departments should be advised of the new limits, and 2014 personnel budgets will also need to be reviewed due to the new limit on FICA wages, and the higher limits on contributions to qualified plans.
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