As is the case every year, the New Year brings a host of changes for retirement plan contributions in 2015. Virtually all retirement plans, like employer sponsored plans and self-employed plans, will be affected. With inflation being on the low end of the scale, the changes in contribution and income limits will be only moderate at best.
Employer Sponsored Retirement Plan Limits
401(k) plans. For all employer sponsored retirement plans — like 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan — the contribution limits have increased from $17,500 in 2014 to $18,000 for 2015.
401(k) catch-up. The catch-up contribution limit for employees, ages 50 or older, who participate in the above mentioned plans, goes up to $6,000 for 2015. This is increased from $5,500 in 2014. Even if you don’t turn 50 until Dec. 31, 2015, you can make the additional $6,000 catch-up provision for the current year.
IRA plans. IRAs (or Individual Retirement Account) contribution limits have stayed the same since 2013. The annual $5,500 limit remains unchanged, and many blame this on low inflation problems. Additionally, as is the case with 401(k) plans and other employer plans, the catch up provision for IRAs is unchanged from 2013 at $1,000. This makes the maximum IRA contribution for those 50 and older $6,500 for 2015.
Traditional IRA Income Limits
If you or your spouse are covered by another retirement plan, IRAs have income limits beyond which their tax deductibility is phased out until it disappears completely. However, you can actually earn a bit more income, compared to 2013 limits, before hitting the phase out stage.
Here are the income range phase outs for 2013 for those who are covered by another retirement plan–they apply strictly to traditional IRAs:
- Single taxpayers increased to between $61,000 and $71,000 in 2015
- Married filing jointly increased to between $98,000 and $118,000 in 2015
- Married filing jointly in which the spouse making the IRA contribution is NOT covered by a pension, but the other spouse is, increases to between $183,000 and $193,000 in 2015
- For married individuals filing separately, who are covered by a workplace retirement plan, the phase-out range remains $0 to $10,000 in 2015
Roth IRA Income Limits
Roth IRA deductibility is also subject to phase out based on income, but those limits are very different than what they are for traditional IRAs. The income level phase outs for 2015 are as follows:
- Single taxpayers increased to between $116,000 and $131,000 in 2015
- Married filing jointly increased to between $183,000 and $193,000 in 2015
- Married filing separately, remains unchanged, with the phase-out range staying at 0 to $10,000
SEP IRA, SIMPLE IRAs, and Solo 401(k) Plans
Contributions to self-employed retirement plans are also up slightly for 2015:
SIMPLE IRA. Increasing from $12,000 in 2014 to $12,500 in 2015. The catch up provision for taxpayers age 50 and older is up $500 from $2,500 in 2014 to $3,000 in 2015.
SEP IRA. Increasing from $52,000 in 2014, to $53,000 in 2015. SEP IRA contribution maximums are based on a contribution rate of up to 25% of gross income (after subtracting out the amount of the contribution itself). That income limit has been increased to $265,000 in 2015.
Solo 401(k). Matching the employee 401(k) limits, contributions to a Solo 401(k) are the same as the SEP IRA contribution limits. They increased from $52,000 in 2014, to $53,000 in 2015.
2015 Retirement Contribution Limits Table
|401(k), 403(b), or 457 plans||$18,000||$17,500||+$500|
|50+ catch-up limits for above||$6,000||$5,500||+$500|
|Traditional IRA plans||$5,500||$5,500||None|
|Roth IRA plans||$5,500||$5,500||None|
|50+ catch-up limit for IRAs||$1,000||$1,000||None|
|50+ catch-up limit for SIMPLE IRA||$3,000||$2,500||+$500|
|50+ catch-up limit for Solo 401(k)||$3,000||$2,500||+$500|
Retirement Saver’s Credit Changes
When contributing to a retirement account, whether an employer sponsored plan or an IRA, you could be eligible for a tax credit on your income tax return. For 2015 the AGI (Adjusted Gross Income) limit for the saver’s credit (also known as the retirement savings contribution credit) is $61,000 for couples MFJ, up from $60,000 in 2014, and $45,750 for heads of household, up from $45,000.
For single individuals or those married filing separately, the limit is $30,500 for 2015, up from $30,000. This credit is an incentive targeted at low- and moderate-income workers to encourage retirement savings.
Source: Internal Revenue Service 2015 Limitations October 23, 2014.