IRS Raises Retirement Plan Contribution Limits for 2015
Filed under: The Advisor's Blog
Each year, the IRS adjusts pension plan contribution limits based on increases in the cost of living. These adjustments help savers offset the effects of inflation upon their retirement savings. In 2015, workers will be able to contribute more to their retirement savings plans, with taxes deferred until they begin taking distributions.
Some of the changes for 2015 include:
- The elective deferral limits for 401(k), 402(b), most 457 plans, and the Thrift Savings Plan will be increased to $18,000. These limits were previously $17,500 each in 2014.
- Taxpayers aged 50 and older can now make additional catch-up contributions of $6,000 to their 401(k), 403(b), 457 or Thrift Savings Plan – an increase of $500 over this year’s limit for catch-up contributions.
- In order to qualify for the Saver’s Credit, taxpayers must earn less than certain Adjusted Gross Income (AGI) limits, depending upon their tax filing status. For 2015, this limit has been raised to $61,000 for married couples filing jointly, $45,750 for heads of household, and $30,500 for those who are single or married filing separately.
- Taxpayers who choose to contribute to an Individual Retirement Arrangement plan (IRA) are subject to certain income limits. For singles and heads of household who are covered under a workplace retirement plan, this ability is phased out when AGIs fall between $61,000 and $71,000. For married couples who file jointly, the contribution limits phase out between $98,000 and $118,000 if the spouse who makes the contributions is covered under a workplace retirement plan. If the person making the IRA contributions is not covered under a workplace retirement plan, but is married to someone who is covered under such a plan, the ability to contribute to an IRA is phased out when the couple’s AGI falls between $183,000 and $193,000.
- For single taxpayers and heads of household, the AGI phase-out range for determining Roth IRA contributions is $116,000 to $131,000. For married couples filing jointly, phase-out begins at $183,000 and stops at $193,000.
http://www.journalofaccountancy.com/News/201411183.htm
