On October 23, 2014 the IRS announced cost of living adjustments that will affect the contribution limits for retirement plans in 2015. This new announcement reinforces the importance of saving and staying on track for retirement. In this day and age, the burden of retirement income falls more heavily on our shoulders than ever before. Proper education and planning allows everyone to take control of their retirement future.
Employers who offer a 401(k) as well as other retirement plans should be aware of these recent changes and take a proactive step in informing their employees.
Here is a summary of the changes taking effect:
- For individuals under the age of 50, the maximum deferral from your paycheck will be $18,000, up from $17,500. This deferral amount is what employees are allowed to contribute tax-deferred each year.
- For those individuals age 50 or older, “catch-up” contribution limits will also increase from $5,500 to $6,000. This means that those employees over age 50 could contribute as much as $24,000 into their 401(k) for 2015, not including employer matching contributions.
While the IRS announced these changes to retirement plans, they also made contribution limit increases to IRAs, Simple IRAs, and many more. All of these changes mentioned above can be accessed on the Internal Revenue Service website (www.irs.gov). Your 401(k) plan administrator should be up to date on all of these changes and making updates to payroll processing allowing participants to increase their deferral limits to the new maximum.
As always, make sure you have a Financial Advisor review your company retirement plan in order to make sure your plan investments are suitable and performing as expected. In addition, your company retirement plan Financial Advisor can be used as a resource to your employees for education and retirement planning assistance.
For more information on this topic please feel free to contact us directly.