2015 IRS Contribution Limits

Are you looking for how much you can increase your 2015 retirement plan savings?

I have created a place that you can go to check out the contribution limits for your desired retirement vehicle (i.e. IRA, 401k).  Please check out my Pinterest board, IRS Contribution Limits 2015, at http://www.pinterest.com/chrisgurneyerpa/irs-contribution-limits-2015/.

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2015 Retirement Contributions

Getting ready for the new year?  It is a great time to adjust your retirement contributions for 2015. The Internal Revenue Service (IRS) has a list of the new limits on their website located at http://www.irs.gov/uac/Newsroom/IRS-Announces-2015-Pension-Plan-Limitations;-Taxpayers-May-Contribute-up-to-$18,000-to-their-401(k)-plans-in-2015. Do you have an IRA? In general, you can make contributions up to $5,500. Do you have a 401(k) or 403(b) plan? You can up your contributions to $18,000. Older employees may be able to contribute up to $6,000 more. However, your plan may have additional limits that might restrict you to a lower number so be sure to check with your benefits department.

Happy Holidays and Happy New Year!

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Mid Year Contribution Check

Earlier this year, I discussed contributions to your retirement plan.  Are you working more than one job and able to contribute to multiple plans?  Have you switched employers this year and able to make contributions to more than one plan?  The IRS holds you responsible for ensuring you do not put too much in as employee contributions during a calendar year.  If you exceed the limit, you are responsible for taxes.  The IRS issued an industry newsletter pointing out a resource on their web site that would be of better use to many participants.  The article is located on their website at http://www.irs.gov/Retirement-Plans/How-Much-Salary-Can-You-Defer-if-You’re-Eligible-for-More-than-One-Retirement-Plan%3F.  If you have already exceeded the limit, I recommend going to your current employer's plan contact and have them help you with the return and correction process.

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Retirement Plan Help - Gov't Agencies

Where do you go for help?  I always suggest starting with your plan administrator with any questions.  What happens if it is clear there is a problem with your retirement plan account and you need help because the plan administrator is not helping or appears to be acting shady?

Briefly, I wanted to go over different government agencies that may be able to help you.

For all qualified retirement plans regardless of type, the Internal Revenue Service (IRS) and Department of Labor (DOL) can be of help:
Employee Benefits Security Administration (EBSA) of the DOL http://www.dol.gov/ebsa/publications/Filingretirementclaim.html
IRS http://www.irs.gov/uac/Contact-Your-Local-IRS-Office-1


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Summary Annual Report (SAR) for Your Retirement Plan

What is the Summary Annual Report (SAR)? Once a year, you likely receive a one or two page document for your retirement plan entitled Summary Annual Report. What is it?

Every qualified retirement plan is required to annually report with government agencies. They submit a  form each year and generate an SAR to distribute to plan participants. The SAR is required to be distributed to participants (active and terminated) along with other individuals (death beneficiaries and alternate payees from Qualified Domestic Relations Orders) entitled to benefits under the plan.

The SAR is an aggregate or plan-level summary.  It does not tell you how much is in your account.  So what value is it to you?  The form gives you information about the plan administrator with contact information.  You should already have this information. The form also gives information on obtaining the full form from the Department of Labor (DOL). You are entitled to a copy if you want, but you will not receive much useful information from doing so.

In general, it does not tell you a lot. However, it can warn you regarding potential problems. It is key that you compare expected activity to the year reported on the SAR. If you are a participant in a Roth or 401(k) account who made contributions during the year, employee contributions of $0 is a big red flag.   If you are a participant who rolled over funds from an old retirement plan during the reporting year and you see $0 for rollovers from other plans, that is a big red flag. I also suggest reviewing your statements first. If you see the contributions on your statements and the time frames match up, the SAR likely has a reporting error. I would still recommend following up with your contact at the plan administrator since they may need to file a corrected form with the government.

Let's say you rolled over $100,000 to your current employer's plan from the profit sharing at your last employer during the 2011 calendar year. You see the 2011 calendar year statements and SAR both show $0 in rollovers for that new plan. Your prior employer's statement shows the funds went out and you received an IRS Form 1099-R for the 2011 year. Your plan administrator denies receiving the funds and the old company's plan says the same thing. You may wish to escalate the situation to the Department of Labor's EBSA office or the IRS.


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Retirement Benefits After a Job Loss

If you have left a job recently, you may have concerns over retirement and health benefits.  The Department of Labor has a great resource located on their website at http://www.dol.gov/ebsa/publications/joblosstoolkit.html#.UHc9irS8_ww.  I recommend taking a look if you haven't already done so!  FYI Includes a Spanish-language resource.

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What are the Key Aspects of Your Retirement Plan

As a plan participant, you may be curious about different retirement plan arrangements.  In the following post, http://christinegurneyuspension.com/2012/10/02/ebsa-retirement-plan-comparison-chart/, you can go to a government chart that includes general rules such as vesting that contract different retirement plans.

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Spanish Retirement Plan Materials From EBSA

As part of the EBSA's National Hispanic Heritage Month education efforts, they have included retirement plan related Spanish language materials on their website at http://www.dol.gov/ebsa/newsletter/.  In addition, there are also Spanish language videos on the newsletter website for those fluent in Spanish who might not speak the language. Great education efforts to share with friends and family!

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Participating in a Retirement Plan

On Monday, we commemorated Labor Day.  The law that governs retirement plans, ERISA, was signed into law on Labor Day 38 years ago.  I find it only fitting that we discuss participating in retirement plans this week.  Due to the variety of retirement plans, participation can be an active or rather passive process.  If you are in an defined benefit plan or any retirement plan that only allows for employer contributions and you are unable to direct plan investments, you may only need to complete a beneficiary form.

Regardless of your plan type, you should receive a Summary Plan Description (SPD), or a brief summary of the plan document written at a layman level, within ninety days of becoming eligible for the plan.  If you direct investments, you will need to make a choice on an enrollment or investment election form.  If you are able to make employee contributions, you will also need to make a choice on an enrollment form.  Regardless of plan type, you will need to complete beneficiary forms.  The form will determine how your vested benefit will be distributed if you die.  Sometimes these elections will be on three separate forms or they can all be combined on the same form.  As a result, terms other than investment election, beneficiary or enrollment form may be used by your plan administrator.

I would encourage everyone to participate if they haven't already.  If you think you should be eligible and you haven't received any paperwork or instruction about how to sign up, a brief call to your benefits department may be useful.  They should be able to help you out with signing up or advise you regarding when you should be eligible.  If you are not expected to meet eligibility, for example due to hours worked, they should also let you know that.  Many employers gladly discuss the plan and/or give out SPD's before participants are not even eligible yet, if an employee is interested.  They are not required to, but they often want to share the great benefits that you may qualify for in the future.

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Summary Plan Description (SPD) Part I Vesting

Last week, I touched on different documents that you will want to retain as a plan participant.  A document of particular importance is the Summary Plan Description (SPD).  An SPD is a summary of the plan document written for a layperson to understand.   From my first post about participant statements, you may have noticed an item called vested percentage and/or amount on your statement.  Vested means the portion of your benefit that you have already earned.  Any unvested benefits will not be yours and are considered forfeited or given up when you separate from service.

Any employee contributions you make to your retirement plan are 100% vested.  Based on the type of plan you are in these contributions include:  401(k), 403(b), Roth, Rollover, Voluntary, and Mandatory.  Other names are also used, but the general rule is if you elect your own money to go into the plan, it cannot be forfeited.  Employer contributions can be 100% vested but are typically subject to vesting schedules.  The type of employer contribution is important because different types are subject to different vesting schedules.  This is where your SPD comes in to play.

Are you in a retirement plan that has employer match contributions and employer profit sharing contributions?  You will want to look under vesting in the SPD for the appropriate schedules.  Generally, you will see a table with the number of years of service you need to reach different percentages.  For example, you may be 0% at one and two years of service for profit sharing contributions.  In year three, you become 100% vested.  You will want to check your participant statements to see if they match the service you have earned.  Once you have earned vesting, it cannot be taken away from you.

The SPD should explain how vesting service is calculated.  Some plans are written to only count plan years employed.  More often plan documents are written to calculate based on having worked a certain number of hours.  Most often the requirement is 1000 hours in one year.   However, sometimes a document does not require as high a threshold of 1000 hours and chooses something like 900 hours in one year.  Other provisions to be aware of are restrictions on service you earned prior to establishment of the plan or a certain age.  If those provisions apply, they should be disclosed in the SPD.

Other factors such as amendments to the vesting schedule, lapses in service, grandfathered service, and changes in plan years also affect service.  If you see that your vested percentage is different than what you feel it should be, consult the contact for the plan.  Often times, your participant statement will have a phone number to call.  Some of the other factors mentioned briefly above may explain these differences, and your plan administrator should be happy to provide an explanation.  If there is an error, they should fix the percentage.

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