Date: December 19, 2014
To: All Rutgers Faculty and Staff Members
From: Vivian Fernández
Vice President for Faculty & Staff Resources
Re: Elective Retirement Plan Cap Increases for Tax Year 2015

In order to keep pace with inflation, the Internal Revenue Service (IRS) has announced cost of living adjustments for certain elective retirement plans for Tax Year 2015.  These adjustments raise the contribution cap and compensation limit for certain elective retirement plans regulated under federal tax code and are effective January 1, 2015.

Highlights of the IRS adjustments include:

  • Employee elective deferral (contribution) limits, for those who elect to participate in the university’s Alternate Benefit Program (i.e. the State’s ABP plan – a 403(b) plan), the university’s Deferred Compensation Plan (i.e. the State Employees Deferred Compensation plan – a 457 plan), and the federal government’s Thrift Savings Plan (TSP), increase from $17,500 annually to $18,000 annually.  Employees over age 50 may be able defer additional monies under these plans pursuant to a catch-up contribution.  The catch-up limit increases from $5,500 to $6,000.
  • Employee elective deferrals, under certain plans, must be coordinated; others do not.  This is particularly the case if a Rutgers employee were to have more than one employer in a given tax year.  Section 402(g)(1), on the exclusion for elective deferrals, addresses these certain requirements.  The coordinated limit increases from $17,500 to $18,000.  The maximum annual contribution limit, for certain defined contribution plans, under Section 415(c)(1)(A), will be increased from $52,000 to $53,000.
  • The annual compensation limit related to the Rutgers Alternative Benefit Program (i.e. the State ABP 401(a)(17) in which there is an employee and employer contributions) will be increased from $260,000 to $265,000.
  • The limitation on the annual benefit for individuals who participate in a defined benefit plan, under section 415(b)(1)(A), remains unchanged at $210,000.  Participants who participated in a defined benefit plan (i.e. PERS, PFRS) and who separate from service prior to January 1, 2015, whose compensation approaches this limitation may need to perform a specified compensation calculation.
  • The limitation used in the definition of highly compensated employees, under Section 414(q)(1)(B), will be increased from $115,000 to $120,000.

Please note that these new guidelines do not affect the out-of-pocket contribution or benefit limits for State-administered PERS, PFRS, and ABP pension plans.

In order to revise your contribution rate and take advantage of the increased contribution cap, please complete the Carrier Allocation / Salary Reduction Form at http://uhr.rutgers.edu//sites/default/files/form_applications/CarrierAllocationSalaryReductionForm_2.pdf and return to your local Benefits Administration or Human Resources office.  If you have any questions, please feel free to contact the Benefits Administration Service Center at (848) 932-3990, or via email at benefits@hr.rutgers.edu.