Feb 042015
As there have been recent updates to the 2014 Monthly Transit/Vanpool Limit and the 2015 Standard Mileage Rates, WageWorks is providing an updated listing of the cost-of-living adjustments (COLA) that apply to dollar limitations set forth in certain IRS Code sections. The Consumer Price Index rose enough since the third quarter of last year to warrant an increase in some, but not all, indexed figures for 2015.
Social Security and Medicare Wage Base
For 2015, the Social Security wage base increases to $118,500 from $117,000 in 2014. The Social Security rate of 6.2% is applied to wages up to the maximum taxable amount for the year; the Medicare portion of 1.45% applies to all wages.
| 2012 | 2013 | 2014 | 2015 | |
| Social Security Wage Base | $110,100 | $113,700 | $117,000 | $118,500 |
| Employee Social Security Rate | 4.2% | 6.2% | 6.2% | 6.2% |
| Employee Medicare Rate | 1.45% | 1.45% | 1.45% | 1.45% |
| Total Employee Rate | 5.65% | 7.65% | 7.65% | 7.65% |
| Employer Matching Rate | 7.65% | 7.65% | 7.65% | 7.65% |
Indexed Compensation Levels
The indexed compensation level for determining who is considered highly compensated increased and remains unchanged for the Key Employee definition for 2015:
| 2012 | 2013 | 2014 | 2015 | |
| Highly Compensated Employee | $115,000 | $115,000 | $115,000 | $120,000 |
| Top Paid Group of 20% | $115,000 | $115,000 | $115,000 | $120,000 |
| Key Employee, Officer | $165,000 | $165,000 | $170,000 | $170,000 |
401(k) Plans
The maximum for elective deferrals increased to $18,000 for 2015 from 17,500 in 2014. The catch-up contribution for those 50 or older increased to $6,000 for 2015 from $5,500 in 2014. That means if you are age 50 or over during the 2015 taxable year, you may generally defer up to $24,000 into your 401(k) plan.
| 2012 | 2013 | 2014 | 2015 | |
| Maximum Employee Deferral | $17,000 | $17,500 | $17,500 | $18,000 |
| Catch up allowed for those 50 and over | $5,500 | $5,500 | $5,500 | $6,000 |
Healthcare FSA
| 2013 | 2014 | 2015 | |
| Salary Reduction Annual Limit | $2,500 | $2,500 | $2,550 |
Adoption Credit
For 2015, this tax credit increases from $13,190 to $13,400. The credit starts to phase out at $201,010 of modified adjusted gross income (AGI) levels, and is completely phased out when modified AGI reaches $241,010.
| 2012 | 2013 | 2014 | 2015 | |
| Phase Out (modified AGI) | $189,710 to $229,710 |
$194,580 to $234,580 |
$197,880 to $237,880 |
$201,010 to $241,010 |
| Adoption Expenses | $12,650 | $12,970 | $13,190 | $13,400 |
The exclusion from income provided through an employer or a Section 125 cafeteria plan for adoption assistance also has a $13,400 limit for the 2015 taxable year. And remember, a participant may take the exclusion from income and the tax credit if enough expenses are incurred to support both programs separately.
Health Savings Account (HSA)
Minimum deductible amounts for the qualifying high-deductible health plan (HDHP) increased to $1,300 for self-only coverage and $2,600 for family coverage in 2015. Maximums for the HDHP out-of-pocket expenses increase to $6,450 for self-only coverage and $12,900 for family coverage.
Maximum contribution levels to an HSA also increased for 2015 to $3,350 for self-only coverage and $6,650 for family coverage. The catch-up contribution allowed for those 55 and over is set at $1,000 for 2015. Remember, qualifying HDHPs and no other impermissible coverage (such as coverage under another employer’s plan or from a health-care flexible spending account that is not specifically compatible with an HSA) are required in order to fund an HSA.
| 2012 | 2013 | 2014 | 2015 | |
| Minimum deductible amounts for the qualifying high-deductible health plan (HDHP) | ||||
| Individual coverage | $1,200 | $1,250 | $1,250 | $1,300 |
| Family coverage | $2,400 | $2,500 | $2,500 | $2,600 |
| Maximum contribution levels | ||||
| Individual coverage | $3,100 | $3,250 | $3,300 | $3,350 |
| Family coverage | $6,250 | $6,450 | $6,550 | $6,650 |
| Catch up allowed for those 55 and over | $1,000 | $1,000 | $1,000 | $1,000 |
| Maximums for HDHP out-of-pocket expenses | ||||
| Individual coverage | $6,050 | $6,250 | $6,350 | $6,450 |
| Family coverage | $12,100 | $12,500 | $12,700 | $12,900 |
Archer Medical Savings Account (MSA)
For a high-deductible insurance plan that provides self-only coverage, the annual deductible amount must be between $2,200 and $3,300 for 2015. Total out-of-pocket expenses under a plan that provides self only coverage cannot exceed $4,450. The annual deductible amount must be between $4,450 and $6,650 for a plan that provides family coverage in 2015, with out-of-pocket expenses that do not exceed $8,150.
Although new MSAs are not allowed, maximum contributions to an existing MSA that are attributable to a single-coverage plan is 65% of the deductible amount. Maximum contributions for a family-coverage plan are limited to 75% of the deductible amount. MSA contributions must be coordinated with any HSA contributions for the taxable year and cannot exceed the HSA maximums.
| 2012 | 2013 | 2014 | 2015 | |
| Minimum deductible amounts for the qualifying high deductible health plan (HDHP) | ||||
| Individual coverage | $2,100 – $3,150 | $2,150 – $3,200 | $2,200 – $3,250 | $2,200 – $3,300 |
| Family coverage | $4,200 – $6,300 | $4,300 – $6,450 | $4,350 – $6,550 | $4,450 – $6,650 |
| Maximum contribution levels | ||||
| Individual coverage – percentage of deductible amount |
65% | 65% | 65% | 65% |
| Family coverage – percentage of deductible amount |
75% | 75% | 75% | 75% |
| Maximums for HDHP out-of-pocket expenses | ||||
| Individual coverage | $4,200 | $4,300 | $4,350 | $4,450 |
| Family coverage | $7,650 | $7,850 | $8,000 | $8,150 |
Dependent and/or Child Daycare Expenses
Just a reminder that although the daycare expense limit associated with a cafeteria plan is not indexed, the tax credit available through a participant’s tax filing was raised in 2003. The daycare credit must be filed on Form 2441 and attached to the 1040 tax filing form. The limits for the daycare credit expenses are $3,000 of expenses covering one child and $6,000 for families with two or more children. If one of the parents is going to school full time or is incapable of self-care, the non-working spouse would be “deemed” as earning $250 per month for one qualifying child and $500 for two or more qualifying children. This “deemed” earned income is used whether a person is using the employer’s cafeteria plan or taking the daycare credit.
The cafeteria plan daycare contribution limit is $5,000 for a married couple filing a joint return, or for a single parent filing as “Head of Household.” For a married couple filing separate returns, the limit is $2,500 each. The daycare credit is reduced dollar for dollar by contributions to or benefits received from an employer’s cafeteria plan. An employee may participate in their employer’s cafeteria plan and take a portion of the daycare expenses through the credit if they have sufficient expenses in excess of their cafeteria plan annual election, but within the tax credit limits.
Commuter Accounts
For 2015, the monthly parking amount remains the same at $250. The 2015 monthly limit for transit decreases to $130 in 2015 without further legislation.
| 2012 | 2013 | 2014 | 2015 | |
| Parking – monthly limit | $240 | $245 | $250 | $250 |
| Transit and Vanpooling – monthly limit | $240 | $245 | $250* | $130** |
*Retroactive increase 12/2014
**Previous legislation expired 12/31/2014
Long-Term Care
For a qualified long-term care insurance policy, the maximum non-taxable payment remains at $330 per day for 2015.
| 2012 | 2013 | 2014 | 2015 | |
| Non-taxable per day payment | $310 | $320 | $330 | $330 |
You can find the Revenue Procedures here.
Standard Mileage Rates
Although not an indexed figure, the standard mileage rates changed for 2015:
| Purpose | 2012 | 2013 | 2014 | 2015 |
| Business | .555 | .565 | .56 | .575 |
| Medical/Moving | .23 | .24 | .235 | .23 |
| Charitable | .14 | .14 | .14 | .14 |
Earned Income Tax Credit (EITC)
Finally, by participating in a cafeteria plan, the participant will be lowering their income for the Earned Income Tax Credit (EITC). Check out the new limits in IRS Publication 596 “Earned Income Credit” and for more information about this tax credit.