IRS Provides Cost-of-Living Adjustments for Retirement Savers
While IRS and good news aren’t usually synonymous, the retirement contribution maximums the agency has just released might give you something to smile about. Several allowable contribution amounts have increased in order to reflect a rise in the cost of living for 2015.
Beginning with 401(k) contributions, employees will be able to put in $18,000 per year (an increase of $500 from 2014). For those over age 50, the catch-up contribution has gone up to $6,000. This means that in total, taxpayers over 50 can contribute up to $24,000 in retirement funds in 2015.
The phase-out adjusted gross income (AGI) amounts for taxpayers making contributions to a traditional IRA, but who are covered by a workplace retirement plan have increased by $1,000 for singles and $2,000 for married couples filing jointly. The $2,000 AGI increase is also true when only one spouse is covered by a workplace retirement plan. Roth IRA phase-out AGI levels have increased as well.
For low and moderate income taxpayers receiving retirement savings contribution credit, the threshold will rise $1,000 for married couples filing jointly, $750 for heads of household and $500 for individual filers.
What hasn’t changed is the maximum IRA contribution, which is holding steady at $5,500, with a catch-up amount of $1,000.
With these positive adjustments coming up next year, it’s a good time to check with your accountant to make sure you have everything in place to make your maximum allowable contribution.