We have listed below a number of changes for 2014 from the IRS and Department of Labor:
IRS Announces 2014 Pension Plan Limits.
The IRS has announced the 2014 pension plan limits. The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), and most 457 plans remains unchanged at $17,500. The catch-up contribution limit for employees aged 50 and over for these plans also remains unchanged at $5,500. To read the IRS' announcement on limitations for 2014, click here.
Social Security Wage Base to Increase in 2014.
Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) program limits the amount of earnings subject to taxation for a given year. The same annual limit also applies when those earnings are used in a benefit computation. This limit changes each year with changes in the national average wage index. We call this annual limit the contribution and benefit base. For earnings in 2014, this base is $117,000. Click here to visit the Social Security's Contribution And Benefit Base page.
2014 Minimum Wage State Changes:
A few states have increased their hourly minimum wage rate effective January 1, 2014. The new rates are:
- Arizona ($7.90)
- California will increase its minimum wage on July 1, 2014 to $9.00 per hour, and on January 1, 2016 to $10.00.
- Connecticut ($8.70)
- Florida ($7.93)
- Missouri ($7.50)
- Montana ($7.90)
- New York will increase its minimum wage to $8.00 effective December 31, 2013.
- Ohio ($7.95)
- Oregon ($9.10)
- Rhode Island ($8.00)
- Vermont ($8.73)
- Washington ($9.32)
Click here for the Depart of Labor's Minimum Wage And Hour Division website.
The Department of Labor announced that 13 states have Federal Unemployment Tax Act credit reductions for 2013.
These states have unpaid federal unemployment account loan balances. Employers in FUTA credit reduction states will be charged an additional 0.6 to 1.2 percent of the first $7,000 earned by each employee during 2013. The following states are affected:
- Delaware has a 0.6 percent credit reduction requiring employers to pay up to $42 in additional FUTA costs for each employee for 2013.
- A credit reduction of 0.9 percent, increasing FUTA costs by up to $63 for each employee for 2013, applies to employers in Arkansas, California, Connecticut, Georgia, Kentucky, Missouri, New York, North Carolina, Ohio, Rhode Island and Wisconsin.
- Indiana has a credit reduction of 1.2 percent for 2013 that increases FUTA costs by up to $84 for each employee.
To calculate how much additional FUTA tax that your company will owe, multiply your 2013 FUTA taxable wages for the affected states times the credit reduction percentage for your state.