The Internal
Revenue Service today announced cost of living adjustments affecting dollar
limitations for pension plans and other retirement-related items for tax year
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.
Highlights include the following:
- 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.
- 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.
- 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.
- 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.
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on both the adjusted and unchanged limitations on INSURANCENEWSNET.com