Legal Alerts

2015 Annual Limits for Employee Benefit Plans

10.27.14

The IRS has announced the 2015 dollar limits for retirement plans and health savings accounts ("HSA"), which reflect the latest cost-of-living adjustments:

  • The 401(k) annual deferral limit increases from $17,500 to $18,000. The "catch-up" contribution limit also increases, from $5,500 to $6,000
  • The 415 annual additions limit increases from $52,000 to $53,000
  • The 401(k)(a)(17) compensation limit will be $265,000, up from $260,000
  • The 415 annual benefit limit for defined benefit plans remains unchanged at $210,000
  • The HSA annual contribution limit for single coverage will be $3,350 ($50 increase)
  • The HSA annual contribution limit for family coverage will be $6,650 ($100 increase)

The Social Security Administration has announced that the maximum amount of earnings subject to the Social Security tax in 2015 will increase to $118,500, up from $117,000.

The annual contribution limit for health flexible spending arrangements ("FSA") increases to $2,550. This is the first indexed change since the Affordable Care Act established a $2,500 limit.

View a copy of the 2015 limits chart.

2015 Participant Notices for Retirement Plans

Employers are reminded that each year special notices must be given to certain participants in a qualified plan to comply with the requirements of the Tax Code and ERISA. Among the more important notices for certain plans are the following:

If you intend to have a "safe harbor" 401(k) plan . . . you must distribute a notice to all employees eligible to participate 30 days prior to the start of the 2015 plan year (by December 1, 2014, for calendar year plans) describing either the safe harbor NEC (3% to all eligible employees) or safe harbor match (100% match on the first 3% deferrals and 50% on the next 2% deferrals). Without delivering a timely notice, your plan cannot be considered a safe harbor plan for 2015 and would be subject to nondiscrimination testing for 2015.

If your 401(k) plan has automatic enrollment . . . an annual notice must be delivered within a "reasonable time" (i.e., 30 days) before the beginning of the plan year to those who remain automatically enrolled. The notice must explain the employee's right to decline automatic enrollment or to change his or her deferral amount, including the right to stop deferrals. Any "automatic increase" feature should also be described in the notice.

If you have selected a "default investment" for your plan . . . participants and beneficiaries who fail to affirmatively direct their investment must receive a notice annually at least 30 days before the start of each plan year that their assets are invested in a "qualified default investment alternative" (QDIA) in the absence of participant investment direction. The notice must describe the participant's right to direct investment of the participant's account, describe the selected QDIA (including investment objectives, risk and return characteristics and applicable fees and expenses), describe the right to change investments and any restrictions and/or fees associated with such a change, and explain where a participant can obtain information about other available investments.

Plan related fee disclosure to participants . . . plan sponsors must continue to provide participants with annual and quarterly notices regarding investments and fees for participant directed plans. Most employers distribute the annual fee notice along with other required notices described above.

If you sponsor a defined benefit pension plan subject to PBGC rules . . . a notice must be delivered that includes basic information about the funding status and financial condition of the plan, including the plan's funding percentage; assets and liabilities; and a description of the benefits guaranteed by the PBGC. Delivery of the notice must be made not later than 120 days after the plan year for large plans; and for small plans (100 or fewer participants) no later than the date on which the annual report is filed (including extensions).

For further information about 2015 annual limits for employee benefit plans, please contact any of the members of the Lindquist & Vennum Employee Benefits Group listed to the right.

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