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Tax Law Blog: 2015 Retirement Plan Limits Announced - October 23, 2014

Every year, about this time, the IRS calculates the cost of living increases, and determines whether the change is enough to trigger an adjustment to the statutory limit/threshold for various areas, including retirement accounts. (Each limit has a statutory threshold so that the limit isn't always changing by just a few dollars. The threshold amount is why limits such as the 401(k) contribution typically either remains the same or changes in increments of $500.) The full list of changes can be found in IR-2014-99 . A few of the most frequently discussed limits are:

  • Limit on employee contributions to 401(k), 403(b) and 457 plans increase from $17,500 to $18,000.
  • Limit on catch-up contribution for persons age 50 and over to 401(k), 403(b) and 457 plans increase from $5,500 to $6,000.
  • Limit on contribution to traditional and Roth IRAs remain the same at $5,500.
  • Phase-out for taxpayers contributing to a Roth IRA is $183,000 to $193,000 for married couples filing jointly, and $116,000 to $131,000 for singles and heads of households. (Increased from $181,000 to $191,000 and $114, to $129,000 respectively). 

I anticipate more cost of living adjustments to come for other areas in these remaining months of 2014.  This also serves as a reminder that it may be a good time to take a look at your contributions so far in 2014 and determine whether any additional contributions would be beneficial if you have not already reached the statutory limit.