The IRS (Internal Revenue Service) today announced cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2015.
The Best Financial Plan That Works
One of the best pieces of financial advice I’ve given over the years is from my friend and client – JD. When we sat down to work on his financial plan, I was surprised to see how much money he had accumulated for his retirement. JD was my son’s little league coach and he lived in a 3 bedroom house and drove a very old mini-van but he was a #MillionaireBy50. JD’s plan was so simple, I started doing it that year. In one sentence, JD told me how to become a Millionaire by the time I turned 50: Whenever the IRS Increases the amount you can put into your IRA, 401 (k), or any other retirement plan – just do it. Take advantage of the IRS Increase. “That’s how I did it and it works.”
This post is dedicated to my friend, client, and the best financial advice any Little League coach ever gave. Thanks, JD! I’m going to take advantage of this IRS Increase in 2015.
Many of the pension plan limitations will change for 2015 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged because the increase in the index did not meet the statutory thresholds that trigger their adjustment.
IRS Increase 401(k) 403(b) most 457 Plans in 2015
- 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 is 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 is increased from $5,500 to $6,000.
IRS Increase IRA in 2015
- The limit on annual contributions to an Individual Retirement Arrangement (IRA) remains unchanged 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 and remains $1,000.
- The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $61,000 and $71,000, 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 $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.
IRS Increase AGI Phase-Out in 2015
- 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. 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.
IRS Increase AGI Limit in 2015
- 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.
IRS Increases Your Chances for a Better Retirement
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