No COLA Increase in 2016

by Ben Wainwright 30. October 2015 13:00
The Internal Revenue Service (IRS) recently announced that for only the third time in 40 years, there will not be a cost of living adjustment (COLA) for Qualified Retirement Plans in 2016. COLA is tied very closely with Social Security (SS), and as a result Social Security beneficiaries will not receive an increase in their monthly benefits. However, due to the hold-harmless provision[1], anyone whose Medicare costs are deducted from their SS benefits will not see an increase in their monthly premium. Indeed, the last decade has seen small increases for SS beneficiaries—the total COLA increase over the past 8 years has only been 14.3%, compared to nearly 70% in the first eight years that it was introduced. Due to the lack of a cost of living adjustment, many Medicare beneficiaries will not see an increase in their benefits. In fact, it is expected that roughly 30% of Medicare Beneficiaries will see an increase in the cost of Medicare. The groups of Beneficiaries expected to be impacted include: · New Enrollees · Enrollees that do not receive SS benefits · Enrollees with higher incomes As a result of this Medicare cost increase, AARP and 70 other consumer advocacy groups has asked Congress to extend the hold-harmless provision to all Medicare beneficiaries; not just the 70% who currently receive Medicare Part B and are eligible for the provision. AARP sent Congress a letter on October 14th, 2015 urging them to extend the provision before it goes into effect on January 1st, 2016. For a summary of the Cost-of-Living Adjustments by Code Section for the past 5 years, follow the link: http://www.urishpopeck.com/pdf/EBPCommentator-COLA-SE2015.pdf [1] A legal statement prohibiting an increase to Medicare B premiums for the vast majority of American citizens. The Medicare hold harmless provision ensures that Medicare B premiums cannot rise more than the previous year's cost of living increase in Social Security benefits.
Categories: Assurance

2013 COLAs for Retirement Plans

by Michael Popeck 7. November 2012 09:13
Each year, the IRS announces cost-of-living adjustments affecting limitations for pension plans and other retirement-related items. For 2013, many of the statutory thresholds that trigger increases in the cost-of-living index were met, while other limitations will remain unchanged. Some of the key highlights include the elective deferral (contribution) limit for employees that participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan increased from $17,000 to $17,500; catch-up contribution limit for employees aged 50 and over in 401(k), 403(b), most 457 plans and Thrift Savings Plan remains unchanged; Individual Retirement Arrangement (IRA) limit increases from $5,000 to $5,500, among other important changes. You can see the full list of changes in the chart below. If you have any question regarding any possible changes to your retirement plan contact a Urish Popeck retirement plan specialist, or take a look at how we can help you successfully manage your retirement plan. Code Section 2013 2012 2011 2010 401(a)(17)/404(l) Annual Compensation        $255,000        $250,000        $245,000        $245,000 402(g)(1) Elective Deferrals          17,500          17,000          16,500          16,500 408(k)(2)(C) SEP Minimum Compensation                550                550                550                550 408(k)(3)(C) SEP Maximum Compensation        255,000        250,000        245,000        245,000 408(p)(2)(E) SIMPLE Maximum Contributions          12,000          11,500          11,500          11,500 409(o)(1)(C) ESOP Limits  1,035,000 205,000  1,015,000 200,000  985,000 195,000  985,000 195,000 414(q)(1)(B) HCE Threshold        115,000        115,000        110,000        110,000 414(v)(2)(B)(i) Catch-up Contributions             5,500             5,500             5,500             5,500 414(v)(2)(B)(ii) Catch-up Contributions             2,500             2,500             2,500             2,500 415(b)(1)(A) DB Limits        205,000        200,000        195,000        195,000 415(c)(1)(A) DC Limits          51,000          50,000          49,000          49,000 416(i)(1)(A)(i) Key Employee        165,000        165,000        160,000        160,000 457(e)(15) Deferral Limits          17,500          17,000          16,500          16,500 1.61-21(f)(5)(i) Control Employee        100,000        100,000          95,000          95,000 1.61-21(f)(5)(iii) Control Employee        205,000        205,000        195,000        195,000 219(b)(5)(A) IRA Contribution Limit             5,500             5,000             5,000             5,000 219(b)(5)(B) IRA Catch-up Contributions             1,000             1,000             1,000             1,000 Taxable Wage Base for Social Security        113,700        110,100        106,800        106,800
Categories: Advisory