IRA and retirement plan limits for 2015

The amount of money you can sock away for retirement in several inflation-adjusted tax items will increase starting in 2015. The IRS has also announced new federal income tax brackets and rates that will impact your 2015 tax return. Planning ahead can get confusing because there is a lot to digest, but it is worth taking advantage of the opportunities to save as much as possible. Here’s a look at 2015 changes:

2015 retirement plan contribution limits

The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan has 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), most 457 plans, and the federal government’s Thrift Savings Plan changed from $5,500 to $6,000.

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. For married couples filing jointly, in which 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 $116,000. 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.

The amount you can contribute to a SIMPLE IRA or SIMPLE 401(k) plan has increased to $12,500 for 2015, up from $12,000 in 2014. The catch-up limit for those age 50 or older has also increased, to $3,000 (up from $2,500 in 2014).

IRA contribution limits

The maximum amount you can contribute to a traditional IRA or Roth IRA in 2015 is $5,500 (or 100% of your earned income, if less), unchanged from 2014. The maximum catch-up contribution for those ages 50 or older remains at $1,000. (You can contribute to both a traditional and Roth IRA in 2015, but your total contributions can’t exceed these annual limits.)

Traditional IRA deduction limits for 2015

The income limits for determining the deductibility of traditional IRA contributions have increased for 2015 (for those covered by employer retirement plans). For example, you can fully deduct your IRA contribution if your filing status is single/head of household and your income (“modified adjusted gross income,” or MAGI) is $61,000 or less (up from $60,000 in 2014). If you’re married and filing a joint return, you can fully deduct your IRA contribution if your MAGI is $98,000 or less (up from $96,000 in 2014). If you’re not covered by an employer plan but your spouse is, and you file a joint return, you can fully deduct your IRA contribution if your MAGI is $183,000 or less (up from $181,000 in 2014).

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Roth IRA contribution limits for 2015

The income limits for determining how much you can contribute to a Roth IRA have also increased. If your filing status is single/head of household, you can contribute the full $5,500 to a Roth IRA in 2015 if your MAGI is $116,000 or less (up from $114,000 in 2014). And if you’re married and filing a joint return, you can make a full contribution if your MAGI is $183,000 or less (up from $181,000 in 2014). (Again, contributions can’t exceed 100% of your earned income.)

This article is provided by Lauri Droster, The Droster Team, RBC Wealth Management, 10 E. Doty St., Madison, Wis. The information included in this article is not intended to be used as the primary basis for making investment decisions. RBC Wealth Management does not endorse this organization or publication. Consult your investment professional for additional information and guidance. RBC Wealth Management, a division of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC.

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