In October of this year, the IRS announced upcoming changes for 2015 in the area of retirement contributions, income phase-out ranges and Social Security. Below is an overview of the highlights, and if you are interested in learning more, contact me for more detailed information.
First to note is that while Traditional and Roth IRA contribution limits remain unchanged at $5,500/year, the IRS is increasing several limits for 2015. 401(k), 403(b) and 457 elective deferral limits will increase to $18,000, along with a higher $6,000 catch-up for those 50 or older. Simple IRA elective deferrals and catch-up increased $500 each for 2015, to $12,500 and $3,000 respectively. The maximum SEP IRA contribution rises as well to 25% of compensation up to $53,000.
If you’re interested in contributing to a Traditional IRA in 2015 and you plan to deduct at least a portion of the contribution, adjusted gross income (AGI) must be less than $118,000 if you’re married filing jointly or $71,000 if you’re single. In addition, if you would like to contribute to a Roth IRA in 2015, the maximum AGI is $193,000 (MFJ) and $129,000 (single). These amounts increased $2,000 from 2014.
Social Security beneficiaries should take note of some changes, too: on October 22, 2014, the IRS announced that you will receive a 1.7% cost of living adjustment (COLA) for 2015. As a result, the maximum monthly retirement benefit will be $2,663, while the average monthly benefit for retired workers is projected to be $1,328.
If you are under full retirement age (FRA), receiving benefits and continuing to earn income, the annual earnings limit will be increased to $15,720 before benefits are reduced $1 for every $2 over the limit. For those continuing to work and pay into the Social Security system, the taxable wage base has been increased to $118,500. This measures the maximum earnings on which the Social Security tax is applied.
*This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.