So, on Halloween, the IRS released its 2014 retirement plan limits. All in, kind of a “snoozer” this year. Here’s a quick review of the most common questions you might be wondering…
So, what changed?
Big picture, not much. The amount individuals can choose to contribute to their tax-favored retirement plans remains the same for 2014 as it is today in 2013. And, the minor changes that did take place don’t impact many people anyway.
OK, so who IS impacted?
Generally more Highly Compensated Employees (“HCEs”), who will see:
- maximum pay includable in retirement plan benefit calculations increase from $255K in 2013 to $260K in 2014
- company-paid contributions ceilings for 401(k), 403(b), and profit sharing uptick by $1K
- defined benefit pension maximum annual benefit increases from $205K to $210K.
All of which very high wage earners will enjoy – particularly those earning $250K or more.
Is anyone going to be unhappy?
Well, here’s what HCEs won’t enjoy: the Social Security Wage base increase from $113,700 in 2013 up to $117,000 in 2014.
And, in fact, this impacts a much greater number of HCEs as compared to the positive changes above – because these increases hit anyone who earns over $113,700 with an increase in Social Security taxes next year.
In fact, those earning $117,000 (or more) will pay 2.9% more in Social Security taxes in 2014 than they did in 2013.
All in, though, most Americans won’t feel any impact from these changes in the year to come.
Author: Ben Hall, ChFC, AIF®
VP & Managing Director – JKJ Retirement Services
Securities and investment advisory services offered through M Holdings Securities, Inc., a Registered Broker/Dealer and Investment Advisor, Member FINRA/SIPC. JKJ Companies are independently owned and operated.