The IRS recently released it’s latest information about what to expect in terms of tax-advantaged retirement accounts in 2015. The IRS evaluates the inflation rate each year, and then determines whether or not to raise contribution limits and change other details about tax-advantaged retirement accounts like IRAs and 401(k)s. If you are figuring out what you can do to prepare for the coming year, here are some things to consider about the IRS and its latest guidance:
- The contribution limit on the 401(k) has been raised to $18,000 a year from $17,500. The catch up contribution, for those age 50 and over, is $6,000 for the year, up from $5,500.
- IRA contribution limits remain the same, at $5,500 for the year, and $1,000 for a catch up contribution.
It’s also important to note that there have been some changes to the income qualifications related to IRAs have also changed. So, even though you can’t contribute more, you can still get a tax deduction if you make a little bit more money. Your ability to take a tax deduction for your Traditional IRA depends on whether you can contribute to a workplace plan, or whether or not your spouse can contribute to a workplace plan.
Additionally you can contribute to a Roth IRA if you make up to $193,000 (the phaseout begins at $183,000) for couples married filing jointly. This allows you an extra $2,000 of income if you want to make a contribution to a Roth IRA. Adjusting the income restrictions upward is one of the ways that the IRS accounts for inflation without actually raising the contribution limit for IRAs.