2014 Pension Plan Limitations Announced by IRS

Published on January 27, 2014

IRS Cost of Living Adjustments The Internal Revenue Service announced some cost-of-living adjustments (COLA) for the 2014 tax year. These adjustments affect employer-sponsored retirement plans such as 401(k)s, defined benefit plans, simplified employee pension plans (SEP IRAs), savings incentive match plans (SIMPLE IRAs) and Roth and Traditional IRAs. A few did not change but many did; you can read the full report with listings of all types of retirement accounts and contribution limits on the IRS website here.

In short, elective deferrals to 401(k) plans remain the same as in 2013 ($17,500 plus $5500 “catch-up” contributions for people age 50 and over). Traditional and Roth IRA contribution caps are $5500 (plus $1000 for the 50-plus group). However, for these IRAs, the modified adjusted gross income limits for contribution deductibility have changed.

For business owners or self-employed individuals with SEP IRAs, the deduction for contributions goes up to $52,000 (an increase of $1,000 over last year).

These limits—such as contribution limits, salary deferral limits, and taxable wage bases—are important considerations as you discuss your retirement goals with your advisor or are determining how to include nontraditional assets in your self-directed retirement plan. All the income and expenses relating to the assets flow in and out of the self-directed retirement plan, which owns the assets within it. If you have any questions regarding self-directed plans of any kind, check our website (http://NextGenerationTrust.com) or contact us at Info@NextGeneraitonTrust.com or (888) 587-8058.


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