IRS and SSA Announce Dollar Limits and Thresholds for 2014


The Internal Revenue Service has announced cost-of-living adjustments to the dollar limits on contributions made to, and benefits under, tax-favored retirement and benefit plans, and other thresholds for 2014.

While some of the retirement plan limitations will change for 2014 because the increase in the cost-of-living index met the statutory minimum necessary to trigger an adjustment, the annual limits on elective salary reduction contributions and catch-up contributions will remain unchanged.

The dollar limits and thresholds applicable for years beginning in 2014 are as follows:

Retirement Plans

The annual limit on 401(k) contributions, 403(b) elective salary reduction contributions and deferrals under 457(b) plans remains unchanged at $17,500.

The annual dollar limit for catch-up contributions made to an applicable 401(k) plan or 403(b) arrangement for individuals age 50 or over remains unchanged at $5,500.

The dollar limit on annual benefits payable from a defined benefit plan is increased to $210,000 (from $205,000).

The annual limit on contributions and forfeitures that can be allocated to a participant’s account under a defined contribution plan is increased to $52,000 (from $51,000).

The annual limit on compensation that may be taken into account in determining contributions or benefits (and for certain testing purposes) is increased to $260,000 (from $255,000).

The dollar amount used to determine highly compensated employee (“HCE”) status remains unchanged at $115,000.

The dollar amount used to identify a key employee for purposes of the top-heavy test (as well as for certain Section 409A purposes) is increased to $170,000 (from $165,000).

Health Savings Accounts

The annual limit on Health Savings Account (“HSA”) contributions is increased to $3,300 for individual coverage and $6,550 for family coverage (from $3,250/$6,450).  The annual catch up contribution limit for HSA participants who are 55 or older in the year remains unchanged at $1,000.

Qualified Transportation Benefits

The monthly limit for transit expenses is decreased to $130 (from $245) and the monthly limit for parking is increased to $250 (from $245).

Social Security Taxable Wage Base

In addition to these limits, the Social Security Administration has announced that the Social Security taxable wage base will increase to $117,000 for calendar year 2014 (up from $113,700 for calendar year 2013).

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this informational piece (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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