Retirement plan increases in 2015
Published on October 30, 2014
Will You Park More Money in Your 401(k) in 2015?
Some sources are saying that there will be cost of living adjustments coming that will increase retirement plan benefit limits in 2015. These limits are set by the IRS, based on the consumer price index-urban (CPI-U), a measure of the inflation rate from the Bureau of Labor Statistics; the numbers for July, August and September will be released around October 22.
Without getting too balled up in lots of figures, here’s the bottom line regarding the possible increases in retirement plan benefit limits:
- If the CPI-U for September is approximately the same as it was for August (or a bit higher), the annual limit on 401(k), 403(b) and 457 deferrals will increase $17,500 to $18,000 and the catch-up contribution limit for pre-retirees will go from $5,500 to $6,000. If this is the case, this represents a great opportunity for workers or business owners to boost their retirement savings.
- If September’s CPI-U increases more than 1.2 percent over the August rate, then the maximum defined benefit pension would bump up from $210,000 to $215,000; however, this is likely to stay at the present threshold.
- The compensation limit is likely to increase from $260,000 to $265,000.
- The highly compensated employee threshold limit is likely to rise from this year’s limit of $115,000 to $120,000. This is something benefits professional watch because this criterion determines the limit for 401(k) nondiscrimination testing.
You can read the original post that got this conversation going and get more statistics at http://xerox.bz/1nc9vuE.
We’ll keep you posted on what happens with these limits; suffice to say, any opportunity to boost your retirement savings is a good opportunity. Another opportunity to boost retirement wealth is through a self-directed retirement plan; self-direction allows investors to include a wide range of alternative assets in their self-directed Traditional or Roth IRA, self-directed SEP IRA or self-directed SIMPLE IRA for themselves and their employees. Looking to diversify your retirement portfolio?