The Internal Revenue Service announced the cost of living adjustments affecting dollar limitations for pension and retirement plans for tax year 2015.
- The contribution limit for employees who participate in 401(k), 403(b) and most 457 plans, 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) and most 457 plans is increased from $5,500 to $6,000.
- The annual contribution limit to an Individual Retirement Arrangement (IRA) remains unchanged at $5,500. Although subject to cost-of-living adjustments, this did not meet the threshold requiring adjustment. 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.
- Most people can contribute to a Roth IRA the same amount they can contribute to a regular IRA. The use of the Roth IRA is phased-out when your Adjusted Gross Income (AGI) reaches certain levels. The AGI phase-out range for 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 phase-out range is $116,000 to $131,000, up from $114,000 to $129,000.
There are other cost-of-living adjustments which are not noted in this post. We welcome any questions you may have. Please call Laura Dunathan at (631) 727-2180 x 314.