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Friday, November 1, 2013

In keeping with the trend of issuing significant guidance around holidays, on October 31st, 2013, the IRS published its annual cost-of-living adjustments to the dollar limitations on benefits and contributions under qualified retirement plans for 2014 (IR-2013-86).  Although some limitations, such as those governing 401(k) plans and IRAs, remained unchanged for 2014, a number of other limitations were adjusted upward.  Effective January 1, 2014, the following adjusted limitations will apply to qualified retirement plans:

  • The limitation on the annual benefit under a defined benefit plan under IRC 415(b)(1)(A) will be $210,000 (increased from $205,000 in 2013);
  • The limitation for defined contribution plans under IRC 415(c)(1)(A) will be $52,000 (increased from $51,000 in 2013);
  • The annual compensation limit under for qualified trusts under IRC 401(a)(17) will be $260,000 (increased from  $255,000 in 2013);
  • The dollar limitation for key employee in a top-heavy plan under IRC 416(i)(1)(A)(i)  will be $170,000 (increased from $165,000 in 2013);
  • The deduction for taxpayers making contributions to a traditional IRA is phased out:
    • For single individuals and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes, between $60,000 and $70,000 (increased from $59,000 and $69,000 in 2013);
    • For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, between $96,000 to $116,000 (increased from $95,000 to $115,000 in 2013); and
    • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, if the couple’s income is between $181,000 and $191,000  (increased from $178,000 and $188,000 in 2013);
  • The adjusted gross income phase-out range for taxpayers making contributions to a Roth IRA is:
    • For married couple filing jointly, $181,000 to $191,000 (increased from $178,000 to $188,000 in 2013); and
    •  For single individuals and heads of household, $114,000 to $129,000 (increased from $112,000 to $127,000);
  • The adjusted gross income limit for the “saver’s credit” (or the “retirement savings contribution credit”) for low- and moderate-income workers is:
    • For married couples filing jointly, $60,000 (increased from $59,000 in 2013);
    • For heads of household, $45,000 (increased from $44,250 in 2013); and
    • For married individuals filing separately, $30,000 (increased from $29,500 in 2013).

For a summary of other qualified retirement plan limitations, unchanged from this year, see our 2013 limitations summary here.

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