401k and Retirement Plan Limits for 2015 Tax Year

Cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2015 have been announced by the IRS. Many of the pension plan limitations will change for 2015 because the increase in the cost-of-living index met the statutory thresholds for adjustment while other limitations will remain unchanged. The highlights we believe are most important to our clients include:

Elective 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.

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 for a total $24,000 per year.

Limit on annual contributions to an 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.

Taxpayer Deductions

Deductions for taxpayers making contributions to a traditional IRA are as follows:

  • For singles and heads of household who are covered by a workplace retirement plan, the income phase-out is for those with modified adjusted gross incomes 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.

The AGI phase-out range for taxpayers making contributions to a Roth IRA is as follows:

  • For married couples filing jointly, the income phase-out range is $183,000 to $193,000, 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.

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.

Here is a quick glance at the changes in these and other deductions since 2011:

Plan Contribution Limits

To understand exactly how these changes impact you and any alterations you may want to include in your tax planning, please contact your Anders Tax Advisor.