The IRS just announced its adjustments on limitations for contributions to retirement accounts for tax year 2015. Each year, the IRS looks at the cost-of-living index and statutory thresholds and announces any changes.
Here’s a summary of the 2015 changes.
- The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan has increased from $17,500 to $18,000.
- The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan has increased from $5,500 to $6,000.
- The limit on annual contributions to an IRA is staying the same, at $5,500. (The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment, so it stays at $1,000.)
- The phase-out range for claiming a deduction for a contribution to a traditional IRA is being adjusted. The phase-out range for singles and heads of household who are covered by a workplace retirement plan is now between $61,000 and $71,000 of modified adjusted gross incomes (AGI), up from $60,000 and $70,000 in 2014. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is now $98,000 to $118,000, up from $96,000 to $116,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $183,000 and $193,000, up from $181,000 and $191,000. (For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.)
- The AGI phase-out range for taxpayers making contributions to a Roth IRA is $183,000 to $193,000 for married couples filing jointly, up from $181,000 to $191,000 in 2014. For singles and heads of household, the income phase-out range is $116,000 to $131,000, up from $114,000 to $129,000. (Like traditional IRAs, for a married individual filing a separate return, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.)
- The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $61,000 for married couples filing jointly (up from $60,000 in 2014), $45,750 for heads of household (up from $45,000) and $30,500 for married individuals filing separately and for singles (up from $30,000).
For more details, see the IRS’s announcement.
If you have any questions about how these changes might affect you, give me a call at (864) 836-3136, and we’ll set up a time to talk.