The NASPP Blog

October 30, 2014

2015 COLAs

Last week the IRS and the Social Security Administration (SSA) announced the cost of living adjustments (“COLAs”) for 2015.

No News is Good News?

Earlier this year, there was a lot of talk about potential far reaching tax reform proposed by the House Ways and Means Committee (see the NASPP podcast interview with Bill Dunn of PwC for a recap). Nothing new seems to be happening in that area, so it looks as if 2014 might go down as a very quiet year on the tax front. As a result, the only news is routine – the annual cost of living adjustments.

FICA 

The wage cap for Social Security tax purposes will increase to $118,500 for 2015 up from $117,000 in 2014.  The tax rate remains the same at 6.2%, so this increases the maximum Social Security withholding to $7,347 per employee.

Highly-Compensated Employees

The threshold at which an employee is considered highly compensated for purposes of Section 423 will increase to $120,000 for 2014 (an increase of $5,000 from the threshold of $115,000 for 2014).  (Section 423 allows, but does not require, highly compensated employees to be excluded from participation.)

More Information

SSA Press Release

IRS Press Release

-Jennifer