IRS Issues 2015 Limits for Qualified Retirement Plans, Health FSAs, and Transportation Fringe Benefits

Foley & Lardner LLP

You know it’s Fall when the leaves turn color, jack-o-lanterns wink in the twilight, the World Series plays on… and the IRS announces new indexed annual limits for employee benefit plans. Sticking to tradition, the IRS recently announced the 2015 limits for qualified retirement plans and health flexible spending accounts.

Annual Limit and Applicable Internal Revenue Code Section



1. Maximum elective deferrals to Code §§401(k), 403(b), and 457(b) plans. [Code §402(g)]



Participants who defer to both an employer sponsored 401(k) and 403(b) plan during the calendar year must share a single 402(g) limit. But if a participant defers to both a 401(k) or 403(b) plan, and a 457(b) plan he has two limits: (i) one limit to be shared by the 401(k) and 403(b) plan, and (ii) a second limit for the 457(b) plan.


2. Maximum catch-up contribution for employees age 50 or older. [Code §414(v)]



3. Maximum compensation that can be considered by a qualified retirement plan. [Code §401(a)(17)]



4. Maximum contributions and forfeitures that may be contributed to a participant's defined contribution plan account. [Code §415(c)]



5. Maximum annual pension from a defined benefit plan. [Code §415(b)]



6. Highly-compensated employee (HCE) threshold -- if a participant’s gross pay equals or exceeds this amount in 2015, the participant will be treated as an HCE in 2016. [Code §414(q)]



7. Compensation limit included in “key employee” definition for top heavy plans. [Code §416]



8. Maximum compensation that may be considered by a grandfathered governmental retirement plan. [Code §401(a)(17)]



9. Maximum contributions to a health flexible spending account (FSA).



10. Maximum limit on commuter highway vehicles (van pools) and transit pass benefits. (No change from 2014 limit.)



11. Maximum limit on qualified parking benefits. (No change from 2014 limit.)



Applying the 2015 Qualified Retirement Plan Limits to Non-Calendar Year Plans

When applying the IRS’ 2015 limits to non-calendar year plans, plan sponsors should keep the following in mind:

  • The Code §401(a)(17) cap on plan compensation and the HCE threshold for 2015 apply to plan years that begin during the 2015 calendar year.
  • The 2015 Code §415 dollar limits apply to plan years that end during the 2015 calendar year.
  • The Code §402(g) limit for 2015 applies to the calendar year, even for non-calendar year defined contribution plans.

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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