The 2014 retirement plan limits have recently been announced by the IRS.

These new limits are effective January 1, 2014.

If you are an employee and a retirement plan participant, be sure to contact your employer as soon as possible if you wish to change your retirement plan salary deferrals for 2014. Of course, if you’re a Springwater client, we’re happy to assist!

If you are an employer and either don’t have a retirement plan in place or have questions about your existing one, please contact us for a complimentary tailor-made proposal and comparison with your current plan. You’ll have happier, more satisfied employees while also saving money.

401(k)s, 403(b)s, etc.  The standard contribution limit for employee salary deferrals to a qualified retirement plan – 401(k), 403(b), most 457 plans, and the government’s Thrift Savings Plan – remains unchanged at $17,500 for 2014.

The “Catch-up”.  The “catch-up” deferral limit for these plans also remains unchanged, at $5,500, so a person who is age 50 or older can defer a maximum of $23,000 in 2014.

Annual Defined Contribution Limit.  The maximum “annual additions” limit (salary deferrals, plus profit sharing, plus forfeiture allocations, etc) to a defined contribution plan increases to $52,000 for 2014 (it was $51,000 for 2013). Note that the catch-up deferral is in addition to this, so the annual contribution limit for a person age 50 or older is $57,500.

SEP IRAs and Solo 401(k)s.  The contribution limit for a SEP IRA or Solo 401(k) in 2014 is increased to the lesser of (a) $52,000, or (b) 25% of the employee’s salary.  The compensation limit used in the savings calculation is $260,000 for 2014 (was $255,000 for 2013).

IRAs.  The contribution limits for Traditional and Roth IRAs remain at $5,500 for 2014; the catch-up contribution for a person age 50 or older remains at $1,000 in 2014, for a total of $6,500.

Simple IRAs.  The contribution limit for a Simple IRA remains at $12,000 for 2014; the catch-up contribution for a person age 50 or older remains at $2,500, for a total of $14,500.

Defined Benefit Plans.  Finally, the limitation on the annual benefit of a “defined benefit” plan in 2014 is $210,000 (up from $205,000 in 2013).  This means that contributions to these pension plans can be increased.