The IRS announced its cost of living adjustments (COLA) that impact contribution limitations for the 2015 tax year.

Below is a brief summary of the items that may affect you and your savings.

401k, 403b, most 457 plans, Thrift Savings Plan contribution limits

  • Increased to $18,000 (was $17,500 in 2014)
  • “Catch-up” contribution limit for employees who participate in the above listed plans and are over age 50
    • Increased to $6,000 (was $5,500 in 2014)

Defined contribution plan limits (total basic limit)

  • Increased to $53,000 (was $52,000 in 2014)

Annual compensation limit used to determine contribution for most plans

  • Increased to $265,000 (was $260,000 in 2014)

IRA and Roth IRA contribution limits

  • Remain unchanged at $5,500
  • “Catch-up” contribution limit for individuals over age 50
    • Remains $1,000 (not subject to COLA)

Phase out ranges for tax deductibility of traditional IRA

  • If covered by a plan:
    • Single/HOH: Increased to $61,000 – $71,000 (was $60,000 – $70,000 in 2014)
    • Married filing jointly: Increased to $98,000 – $118,000 (was $96,000 – $116,000 in 2014)
    • Married filing separately: Remains $0 – $10,000 (not subject to COLA)
  • If one spouse is covered by a plan:
    • Filing jointly: Increased to $183,000 and $193,000, (was $181,000 and $191,000 in 2014)

Phase out ranges for eligibility to contribute to Roth IRA

  • Single/HOH: Increased to $116,000 – $131,000 (was $114,000 – $129,000 in 2014)
  • Married filing jointly: Increased to $183,000 to $193,000 (was $181,000 – $191,000 in 2014)
  • Married filing separately: Remains $0 – $10,000 (not subject to COLA)

If you have any questions about how these changes may have an impact on your financial plan, please contact your advisory team.

 

Wealth Enhancement Group is a Greater Minneapolis-based independent wealth management firm offering comprehensive and customized financial planning and investment management services. Established in 1997, Wealth Enhancement Group uses a team approach with a focus on simplifying their clients’ financial lives and has offices nationwide.