The IRS announced the following cost of living adjustments for retirement plans, flexible spending account plans and other benefits in 2015:
- The elective deferral limit for 401(k), 403(b) and 457 plans has increased to $18,000.
- The catch-up contribution limit for employees age 50 and over has increased to $6,000.
- The annual limit on contributions to an IRA remains at $5,000 and the catch-up contribution limit is $1,000.
- The limit on the annual benefit under a defined benefit plan is $210,000.
- The annual compensation limit under section 401(a)(17) has increased to $265,000.
- The dollar limit used for the definition of highly compensated employee has increased to $120,000.
- The Old Age Survivors and Disability Insurance (OASDI) payroll tax rate in 2015 will be 6.20% on wages up to the Social Security taxable wage base.
- The Social Security taxable wage base will increase to $118,500.
- The Medicare payroll tax rate of 1.45% will continue to apply on all wages in 2015, and an additional 0.9% Medicare tax rate will apply on wages over $200,000 for single files, $250,000 for joint filers and $125,000 for people who are married but filing separately.
- The health flexible spending account pre-tax contribution limit will increase to $2,550.
- Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck will be:
- 57.5 cents per mile for business miles driven, up from 56 cents in 2014
- 23 cents per mile driven for medical or moving purposes, down half a cent from 2014
- 14 cents per mile driven in service of charitable organizations
Employers should review their administrative processes to capture the increased dollar limits in 2105.