2015 Pension Plan Limits

December 22, 2014

The IRS recently announced cost-of-living adjustments to annual contribution limits to qualified retirement plans. The following chart summarizes a number of the changes:

 

2015

2014

Annual Compensation Limit

$265,000

$260,000

Limit on Elective 401(k) deferrals

$18,000

$17,500

Catch-up Contributions (age 50 and older)

$6,000

$5,500

Limit on DC annual additions

$53,000

$52,000

Contribution limits to IRAs and Roth IRAs remain unchanged from 2014: $5,500, or $6,500 if you are age 50 or older.

If your goal is to make the maximum retirement plan contributions each year, take the time now to review the contributions to your employer’s retirement plan and make adjustments, as needed.

Be wary of front-loading your retirement plan contributions if your employer provides a match. If you maximize your retirement contributions early in the year, you may miss out on matching that the employer provides throughout the year. Some employers may offer a “true-up” feature to provide matching benefits to those whose contributions would have otherwise been eligible. Check with your plan provider or benefits department to verify how they handle the company match.

Please feel free to contact us if you have any questions about whether and how much you should fund your retirement plans.

 

Referrals of family, friends and colleagues who may benefit from financial planning and investment management guidance are always welcome. Thank you for recommending our firm.

This report has been prepared by West Financial Services, Inc. from original sources and data we believe to be reliable. This report is for informational purposes only and should not be construed as investment, legal or tax advice. Analysis of past market conditions may not predict future market activity.