The Internal Revenue Service announced the cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2015. Many of the pension plan limitations will change for 2015 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment.
The following changes have been taken under the pension plan limitations:
- Contribution limit of catch-up and deferral elective for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $17,500 to $18,000 and $5,500 to $6,000 respectively. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000. Whereas contributions to an Individual Retirement Arrangement (IRA) remains unchanged at $5,500.
- The deduction for taxpayers who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between USD61,000 and USD71,000, up from USD60,000 and USD70,000 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 USD98,000 to USD118,000, up from USD96,000 to USD116,000.
- The AGI phase-out range for taxpayers making contributions to a Roth IRA is $183,000 to $193,000 for married couples filing jointly, up from $181,000 to $191,000 in 2014. For singles the income phase-out range is $116,000 to $131,000, up from $114,000 to $129,000.
- The AGI limit for the saver’s credit low- and moderate-income workers is $61,000 for married couples filing jointly, up from $60,000 in 2014; $45,750 for heads of household, up from $45,000; and $30,500 for married individuals filing separately and for singles, up from $30,000.
