401(k)s – The annual contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan, increased from $17,500 in 2014 to $18,000 for 2015. The catch-up contribution limit for employees age 50 or older goes up to $6,000 for 2015, up from $5,500 in 2014.
SEP IRAs and Solo 401(k)s – For the small business owners and self-employed, the amount contribution amount increased from $52,000 in 2014 to $53,000 in 2015 for a SEP IRA or a solo 401(k). The compensation limit used in the savings calculation is increased to $265,000, up from $260,000.
The SIMPLE IRA – The contribution limit on SIMPLE retirement accounts for 2015 is $12,500, up from $12,000 in 2014. The SIMPLE catch-up limit is $3,000, up from $2,500 in 2014.
Defined Benefit Plans – The 2015 limitation on the annual benefit of a defined benefit plan remains unchanged at $210,000.
IRAs – The $5,500 limit on annual contributions to an Individual Retirement Account remains the same for 2015. The catch-up contribution limit remains at $1,000 as well.
The contribution to your IRA is only deductible if you meet the income limitations:
- Single & Head of Household: 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.
- Married Filing Joint: 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 $118,000. 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.
- Married Filing Separate: An individual 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.
Roth IRA Phase-Outs – In 2015, the AGI phase-out range for taxpayers making contributions to a Roth IRA $183,000 to $193,000 for married couples filing jointly. For singles and heads of household, the income phase-out range is $116,000 to $131,000. All filing status options increased from 2014.
If you would like to contribute to a Roth IRA but your AGI is more than the phase-out, you can contribute to a nondeductible IRA and convert it to a Roth IRA. There is currently no income restrictions for Roth IRA conversions.
The Saver’s Credit – The 2015 AGI limit for the saver’s credit, aka the retirement savings contribution credit, is $61,000 for married couples filing jointly; $45,750 for heads of household; and $30,500 for married individuals filing separately and for singles, up from $30,000.
If you have any additional questions, please contact Gallati Professional Services (firstname.lastname@example.org; 585-445-7285)