Announcement of 401(k) limits for 2014 delayed by shutdown
(MoneyWatch) Around this time each year, the IRS releases the official contribution limits for various retirement plans for the upcoming year. This includes the highly anticipated annual contribution limits for 401(k) plans.
Even though the federal government shutdown ended on Wednesday night, there will be lingering effects. One of these is that we should expect a delay in the official 401(k) limits for 2014, according to an industry report. It is expected that the numbers will not be announced until sometime around Thanksgiving.
But that doesn't mean we need to wait to start our planning. Retirement plan experts, using the IRS formula to adjust limits based on changes in the Consumer Price Index, have projected the "probable retirement plan limits" folks can expect to see.
The 401(k) projections
Experts project that the 2014 limit for 401(k) elective deferrals will remain unchanged from the 2013 limit of $17,500.
Also, if you are over the age of 50 at any time in 2014 (even if you turn 50 on December 31), you should be allowed to contribute an additional $5,500 (which remains unchanged from 2013 limit).
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Other limits
In 2014, the annual contribution limit from all sources that can be made to defined contribution style retirement plans, which includes 401(k) plans, is projected to increase from $51,000 to $52,000. This means that employers can contribute more to the 401(k) retirement plans for their workers in the form of a match.
Don't assume that if you are self employed, this is no help to you. Self employed workers can set up a 401(k) plan and contribute to their own account both as employee and employer, and can take advantage of this higher overall contribution limit.
Finally, the amount of employee compensation that can be taken into consideration for calculating contributions to defined contribution plans is projected to increase next year from $255,000 to $260,000.
Ray Martin
View all articles by Ray Martin on CBS MoneyWatch»
Ray Martin has been a practicing financial advisor since 1986, providing financial guidance and advice to individuals. He has appeared regularly as a contributor on the CBS Early Show, CBS NewsPath, as a columnist on CBS Moneywatch.com and on NBC-TV's morning newscast TODAY. He has also appeared on the Oprah Winfrey Show and is the author of two books.
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