On October 23, 2014, the IRS announced their annual cost-of-living adjustments for retirement plans.
Taxpayers with 401(k), 403(b), most 457 plans and federal government Thrift Savings Plan can contribute up to $18,000 in 2015, increased from $17,500 in 2014. Also, taxpayers age 50 or older in 2015 have the option to contribute an additional $6,000, known as the catch-up contribution. This increased from $5,500 in 2014.
The IRS also announced the increase in the limit on annual contributions to an Individual Retirement Arrangement (IRA) to $5,500. Though the annual catch-up limitation to IRAs for taxpayers 50 years and older still remains $1,000 for 2015.
The phase-out for taxpayers that contribute to a traditional IRA, file as single or head of household and are covered by their employer’s retirement plan increased to $61,000 and $71,000, up from $60,000 and $70,000 in 2014. For taxpayers filing married filing jointly, the phase out increases to $98,000 and $118,000, up from $96,000 to $116,000 in 2014. Married filing separate taxpayers do not receive the cost-of-living adjustment and the phase-out remains $0 to $10,000.
Taxpayers who are not covered by an employer’s retirement plan, but are married to someone who is, the deduction is phased out between $183,000 to $193,000, up from $181,000 to $191,000 in 2014.
For single and head of household taxpayers who contribute to a Roth IRA, the phase-out increased to $116,000 to $131,000, up from $114,000 to $129,000 in 2014. For married filing joint taxpayers, the phase-out for 2015 is $183,000 to $193,000, up from $181,000 to $191,000 in 2014. Married filing separate taxpayers are not subject to the cost-of-living adjustment and the phase-out remains the same.
Any taxpayer that contributes to a defined contribution plan, the limitation has been increased to $53,000, up from $52,000 in 2014.
If you have any questions about 401k or other retirement plans, please do not hesitate to contact us.