In a move that should make retirees and retirement savers at least somewhat cheerful, both the Social Security Administration (SSA) and the Internal Revenue Service (IRS) are providing small increases in income and savings limits.
On October 22, the SSA announced a 1.7% cost-of-living adjustment (COLA) for both Social Security payments and Supplemental Security Income (SSI) benefits. The nearly 60 million Americans receiving Social Security benefits will get increases that average about $20 per month.
The increases for Social Security benefits will begin with the December 2014 benefits (payable in January) and the January SSI payments will also be paid at the end of December (due to a holiday falling on January 1, 2014).
Also, the IRS announced on October 23 that 401(k)/403(b)/457/TSP elective deferral limits will increase from $17,500 to $18,000 after remaining steady for 2013 and 2014 and the catch-up contribution limit for workers over 50 increases from $5,500 to $6,000. Interestingly, the Individual Retirement Account (IRA) contribution limit did not increase and remains at $5,500 as does the $1,000 catch-up contribution.
The threshold for highly compensated employees (HCEs) increases to $120,000 from $115,000 in 2012-2014 and the Social Security wage base increases from $117,000 to $118,500.