2014 Changes to Employer Based Retirement Plans and Social Security

Every year in the fall, the federal government provides new guidelines on how much can be saved to an employer based retirement plan and annual adjustments to Social Security.

Below is a summary of the major changes released this fall for 2014.

• The elective deferral limit (i.e., participant contribution limit) for 401(k), 403(b) and 457(b) plans remains $17,500 for 2014. The catch-up contribution limit remains unchanged at $5,500 for 2014.
• The compensation limit (i.e., the maximum amount of compensation that can be considered for plan purposes) is increased to $260,000 in 2014 from $255,000 for 2013.
• The annual addition contribution limit (i.e., the maximum amount of combined employee and employer contributions that can be contributed to a participant’s account) for individuals in defined contribution plans, such as 401(k) and 403(b)plans, is increased to $52,000 for 2014 from $51,000 in 2013. This amount does not include catch-up contributions.
• The Social Security Wage Base for 2014 is increased to $117,000 for 2014 from $113,700 in 2013.
• Monthly Social Security and Supplemental Security Income (SSI) benefits for nearly 63 million Americans will increase 1.5 percent in 2014. This increase is based on the Consumer Price Index (CPI).  Historically, this is one of the      lowest Cost of Living Adjustments (COLA) to be made over the past 40 years. Last year the increase was 1.7 percent.