The new 2014 contribution limits and related limits for retirement plans have been released.

Here is a Quick Summary:

Defined Contribution Limit (employer & employee combined): $52,000 (formerly $51,000)

401(k) Salary deferral limit: $17,500 (unchanged)

Maximum compensation to be considered: $260,000(formerly $255,000)

Compensation used to determine a Highly Compensated Employee: $115,000 (unchanged)

Compensation used to determine a Key Employee: $170,000

The catch-up contribution limit remains the same at $5,500

The new 2013 contribution limits and related limits for retirement plans were released today.

Here is a Quick Summary:

Annual addition limit: $51,000 (formerly $50,000)

Salary deferral limit: $17,500 (formerly $17,000)

Maximum compensation to be considered: $255,000(formerly $250,000)

Compensation used to determine a Highly Compensated Employee: $115,000

Compensation used to determine a Key Employee: $165,000

Social Security taxable wage base: $113,700 (formerly $110,100)

The catch-up contribution limit remains the same at $5,500

As you know, with a new year comes new contribution limits for Health Savings Accounts and 401(k) retirement plans. This new year is unique because it also ushers in some new rules due to the Patient Protection and Affordable Care Act that was passed last year.

So let’s look first at the limits for Health Savings Accounts and 401(k) plans:

2011 Health Savings Account Contribution Limits

• The annual HSA contribution limit for employee-only coverage will remain at $3,050. It is $6,150 for family coverage.
• The minimum deductible for employee–only HDHP coverage will remain $1,200 ($2,400 for family coverage)
• The catch-up contribution limit for individuals 55 or older is $1,000.

2011 401(k) Retirement and Related Limits

401k Plan Limits for Plan Year 2011 2010
401k Elective Deferrals $16,500 $16,500
Annual Defined Contribution Limit $49,000 $49,000
Annual Compensation Limit $245,000 $245,000
Catch-Up Contribution Limit $5,500 $5,500
Highly Compensated Employees $110,000 $110,000

Non-401k Related Limits
403(b)/457 Elective Deferrals $16,500 $16,500
SIMPLE Employee Deferrals $11,500 $11,500
SIMPLE Catch-Up Deferral $2,500 $2,500
SEP Minimum Compensation $550 $550
SEP Annual Compensation Limit $245,000 $245,000
Social Security Wage Base $106,800 $106,800

2011 Changes due to Health Care Reform

• Over-the-counter (OTC) medications do not qualify under Health Savings Account or Flexible Spending Accounts unless you have a written prescription for them.
• The penalty for using HSA money on non-qualified expenses is now 20%.

Will you survive a retirement plan audit?
How about an employee lawsuit?

You know your business inside and out. But do you know everything there is to know about maintaining your 401(k) plan?

Did you know that a plan fiduciary (YOU, perhaps?) can be held personally liable for a breach of fiduciary responsibility, which may include the plan’s investment choices?

Complying with ERISA requirements can be overwhelming. And even if you have the time to do it, are you sure you have the critical information you’ll need?

It’s essential that your 401(k) vendor and advisor pay attention to fiduciary duties as they affect you as a plan sponsor.

“So what do I look for?” you ask. Here is a handy list for potential improvements:

Replacing underperforming or inappropriate investment options – funds that have underperformed their benchmark and peer group, have style drift issues, or are inappropriate from a risk-adjusted return standpoint must be scrutinized.

Excessive fees at the participant level – are you sure that the fees being imposed on your participants are reasonable? Are more competitively priced, institutional funds being offered or just retail options?

Documentation and due diligence files – a sample Investment Policy Statement and 404(c) form are not enough. Are you being provided with comprehensive due diligence reports and communications that keep you up-to-date with the performance of your plan? Do you understand why your current funds are still in the lineup?

Investment Committee meetings – are you being provided with necessary information to effectively monitor your plan and hold regular investment committee meetings?

Participant direction and education – how are your participants diversifying their assets? Are an overwhelming number of options being presented without much direction? Are your participants being offered a comprehensive savings and advice solution?

Providing a true “select” list of investment options – many 401(k) vendors leave the burden of weeding through funds squarely on the shoulders of the plan sponsor.

The use of proprietary funds or other potential financial conflicts of interest – is your current 401(k) vendor utilizing an unbiased and independent investment selection and review process (or is there an incentive to push one fund over another)?

404(c) compliance – have you reviewed the steps that are required to fully comply with Section 404(c)?

Regular self-audits – have you done one?

Dealing with all the above issues goes a long way toward proving “procedural prudence”. The Department of Labor doesn’t expect you to have a crystal ball, but you ARE expected to act in the best interest of plan participants and make decisions like an expert (you’re an expert, right???).

“So what do I do now?” you ask – this is where we come in. As retirement plan consultants, we specialize in helping companies like you reduce their fiduciary liability and maximize the value of their 401(k) plan. We are looking for a few more great clients – call us to schedule a time to talk about your current plan and how we can help you find areas of concern and areas of improvement.

Each year the plan contribution limits change for qualified plans, so here are the new amounts for 2010:

2010 401(k) limits:

• 401k Elective Deferrals: $16,500
• Catch-up Contribution Limit: $5,500
• Annual Compensation Limit: $245,000
• Highly Compensated Employees: $110,000

2010 non-401(k) related limits:

• 403(b)/457 elective deferrals: $16,500
• SIMPLE Employee deferrals: $11,500
• SIMPLE Catch-up deferral: $2,500
• SEP Minimum Compensation: $550
• SEP Annual Compensation limit: $245,000
• Social Security Wage Base: $106,800

2010 Health Savings Account (HSA) Contribution Limits

For calendar year 2010, the limitation on HSA contributions for an individual with self-only coverage under a qualifying high deductible health plan is $3,050.

For calendar year 2010, the limitation on HSA contributions an individual with dependent coverage under a qualifying high deductible health plan is $6,150.

The Catch-up contribution limit for HSA contributions for individuals over age 55 is $1,000.

Remember, the funds in a Health Savings Account are used to pay for un-reimbursed qualifying medical expenses. Un-used funds carry forward each year, and at age 65 can be used for retirement income.