The Social Security Administration (SSA) recently issued a cost-of-living adjustment for the Social Security taxable wage limit. For tax year 2015, the maximum amount of earnings subject to the Social Security tax will increase to $118,500 ($1,500 increase from 2014). The employee and employer tax rate will remain unchanged at 6.2%. Due to the increase in the wage limit, the maximum Social Security tax payable by an employee will be $7,347 ($93 increase from 2014).

2015 COLA INCREASES FOR DOLLAR LIMIATIONS ON BENEFITS AND CONTRIBUTIONS

The Internal Revenue Service (IRS) also issued a cost-of-living adjustment regarding dollar limitations for pension plans and other retirement-related items for the 2015 tax year. The increase in the 2015 limitations results from an increase in the cost-of-living index. Significant increases are as follows: 

• The 401(k), 403(b), and most 457 plan contribution limits increased to $18,000 ($500 increase from 2014)
• The 401(k), 403(b), and most 457 plan catch-up contribution limits for those aged 50 and over increased to $6,000 ($500 increase from 2014)
• The defined contribution limit increased to $53,000 ($1,000 increase from 2014)
• The annual compensation limit increased to $265,000 ($5,000 increase from 2014)
• The highly compensated employee threshold increased to $120,000 ($5,000 increase from 2014) 

Some of the significant benefit plan limitations that remain unchanged include the defined benefit limitation and limit on annual contributions to an individual retirement arrangement (IRA).