Originally Posted by
FDXLAG
It is 265 this year, last year it was 260, the year before 255. It essentially goes up 5K a year. This is why FDX will not commit and that was my point. If they raised it to IRS limits this year everyone would moan that it has fallen behind next year. The IRS limit will be at least 300K by the amendable date in 2021. No one will be satisfied by a bump to 265.
You are obviously confusing our FAE cap with the IRS benefit limit for a Defined Benefit Plan.
Our
FAE Cap is $260 K, which could result in a maximum
BENEFIT of $130K.
The IRS Limit on
BENEFIT from a Defined Benefit Plan is the
lesser of 100% of an employee's average compensation from his highest 3 consecutive calendar years
or $210K (for 2015).
$130K is well below $210K.
While we must improve our Defined Benefit Plan, I don't think anybody was expecting to raise the
FAE Cap to $420K this time (which would provide a
BENEFIT of $210K), so the IRS Defined Benefit Plan limit on annual
BENEFIT is not a factor.
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The above applies to Defined Benefit Plans -- the IRS limits the annual benefit such a plan can deliver. The $255K, $260K, and $265K numbers you're talking about apply to Defined Contribution Plans, where the IRS limits the
annual CONTRIBUTION to the plan. Benefit plans -- limit benefit; Contribution Plans -- limit contributions.
One way of limiting contributions is by establishing a total dollar value limit. In 2014, that IRS limit was $52,000. An employer could contribute no more than $52,000 to your Defined Contribution Plan. Once that limit is reached, no more contributions can be made from your wages pre-tax dollars. In 2015, the limit was raised to $53,000.
Another limit is to the compensation upon which those contributions are computed. In 2014, the Compensation limit for Defined
Contribution Plans was $260,000. Once an employee reached $260,000 in total compensation for the year, again, the employer can make no more Contributions to the Defined Contribution Plan from pre-tax wage dollars. The 2015 limit was raised to $265,000.
As you might see, an employee that makes a lot of money will be "cut off" from contributions to his Defined Contribution plan when he hits $265,000 in compensation or the $53,000 contribution limit. When he reaches either limit, he receives no more contributions into his Defined Contribution Plan, even if the "definition" of his contributions is a percentage of his wages. Any additional dollars earned effectively lowers that percentage when compared to his compensation. In other words, a 7% B-fund becomes less than 7%, and you could make it a 50% B-fund and it wouldn't provide the employer a penny more benefit.
So, stop confusing "260" and "265" with our A-plan. They have nothing to do with it.
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