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Will 2015 Contribution/Benefits Limits Rise?

We’re just weeks away from the announcement of the 2015 limits — but not so far away that we can’t speculate.

The annual cost of living adjustments (COLAs) for most limits are measured using the CPI-U announced by the Bureau of Labor Statistics (BLS) for July, August and September. Those numbers are announced a few weeks after the end of each month; the September rate will be released on Oct. 22 — at which point we’ll know with certainty.

A new blog post by Buck Consultants’ Marjorie Martin notes that we now have both July and August rates — and opines that, based on those numbers, we’re likely to see increases in the 2015 limits. In fact, she notes that it would require a 2.3% (over 25% annualized) decline in the September numbers to preclude any increase (though it would take a 1.2% (over 12% annualized) increase to lift the DB limit to its next notch.

If the September CPI is about the same as August, Martin projects the following changes:

• Elective deferrals 401(k)/403(b)/457 limits: $18,000 (from $17,500)
• Catch-up contributions: $6,000 (from $5,500)
• DC annual addition: $53,000 (from $52,000)
• Compensation limit: $265,000 (from $260,000)
• Highly compensated threshold: $120,000 (from $115,000)
• DB maximum pension $210,000 (no change)

We’ll see how close those estimates are in about a month…

Also, we’ll start tracking a new limit this year, with the debut of the qualifying longevity annuity contract (QLAC) with its $125,000 cap. Since the QLAC will be adjusted in $10,000 steps, it would require an increase in CPI of 8% (10,000/125,000) before the next limit jump (to $135,000). More information on the QLAC limit is here.