IRS Announces 2015 Retirement Plan Limits

By Joshua A. Diveley.

The IRS has announced the inflation adjusted limits applicable to retirement plans for 2015. Some of the key adjustments for defined contribution plans (including 401(k), 403(b), 457 and profit sharing plans) include:

  • The maximum salary deferral limit is raised from $17,500 to $18,000
  • The additional catch-up contribution deferral limit is raised from $5,500 to $6,000
  • The maximum annual addition to the plan (excluding catch-up contributions) is raised from $52,000 to $53,000
  • The maximum covered compensation for an employee is raised from $260,000 to $265,000
  • The compensation threshold to be considered a “highly compensated employee” (absent a top-paid group election) is raised from $115,000 to $120,000

A copy of the IRS release with additional adjustments affecting retirement plans is available here.

© 2014 Parsonage Vandenack Williams LLC

For more information, Contact Us

IRS Announces Deadline for PPA Restatement for Defined Contribution Retirement Plans

The IRS has issued Announcement 2014-16 indicating that employers sponsoring preapproved defined contribution qualified retirement plans, such as 401(k) and profit sharing plans, will have until April 30, 2016 to restate their plans in their entirety.

The IRS was expected to begin providing approval letters to firms preparing proposed plan documents on or about March 31, 2014. Each employer seeking to rely on those preapproved documents will then have until April 30, 2016 to adopt a restated version of the employer’s plan integrating the specific provisions it elects to have included in the plan. The 2016 deadline marks the end of the current 6-year restatement cycle used by the IRS to make sure plan documents are regularly restated by plan sponsors to comply with changes in law. Preapproved plans have been reviewed by the IRS based on the 2010 Cumulative List of Changes containing updates in the law since the prior restatement period. The current changes will include updates required by the Pension Protection Act (PPA) and Heroes Earning Assistance and Relief Tax Act (HEART).

April 30, 2016 also marks the deadline for employers to submit requests for determination letter for the restated plans, if desired, to confirm that the restatement as drafted based on the options elect is in compliance with law.

© 2014 Parsonage Vandenack Williams LLC

For more information, contact us

Final Rules Issued on Suspension of Safe Harbor Contributions to 401(k) Plans

Employers often elect to make safe harbor contributions to 401(k) plans to avoid the need to perform ADP/ACP nondiscrimination testing annually. However, circumstances may arise where it is beneficial for the employer to suspend the safe harbor contribution during the plan year. The Treasury and IRS have released final regulations on implementing a suspension of the employer’s safe harbor contribution mid-year. First, a safe harbor contribution may be suspended mid-year if the employer is operating at a loss for the plan year. In the alternative, the safe harbor contribution may be suspended during the plan year for any reason or no reason at all if the employer’s annual safe harbor notice contains a statement that the plan may be amended mid-year to remove the safe harbor contribution requirement. Plans with suspended safe harbor contribution requirements must otherwise satisfy applicable nondiscrimination testing for the plan year.

© 2013 Parsonage Vandenack Williams LLC

For more information, contact us