Every year, the U.S. tax code released updates via Publication 17. Staying on top of important changes can help you save time and money, minimize stress and take advantage of loopholes and grey areas. Here are some key changes to look at for 2015.
401(k) contribution limits rise
2014 contribution limits for 401(k) retirement accounts were capped at $17,500, plus another $5,500 in “catch-up” contributions for those 50 or older. We can now take advantage of an $18,000 increase, along with a $6,000 “catch up” for those 50 and above, for 2015 — and 2016.
Employer-based retirement plans such as 401(k)s can be a powerhouse for your portfolio if your employer offers matching contributions. These figures are applicable to 403(b) plans, most 457 plans, and the federal government’s Thrift Savings Plan. It’s important to highlight that to qualify for the catch-up contributions, you need to reach the minimum eligibility age of 50 by December 31.
Traditional IRA deductions are up
IRA contribution limits will remain the same. Currently capped at $5,500, with a $1,000 catch-up contribution allowed for those 50 and older. But However, the ability to deduct traditional IRA contributions from your taxable income was based on a modified AGI cap between $60-$70K for single and HOH filers and $96-$116K for couples filing jointly. The limits have been made a bit more generous for 2015 both AGI brackets increased to $61-71K and $98-$118K respectively.
IRA rollovers limited
As of 2015, you can only execute one IRA rollover per year. A rollover involves taking money out of one IRA, holding it for fewer than 60 days, and then reinvesting into another IRA. (This does not apply to trustee-to-trustee transfers, such as when you move an IRA account and its holdings from one brokerage or trustee to another.)
The myRA debuts
We have a new retirement account option folks! Created by the U.S. Department of the Treasury and designed to be offered through employers. The myRA, or my Retirement Account, is small in scale but still impactful tool for those new to retirement savings. Boasting no fees and a guaranteed growth pattern, your savings are safe with moderate growth potential. Low start-up cost and sustainability cost of $25 to start and a minimum contribution of $5 at a time, I can predict this will be a popular product among Millenials just getting their feet wet in the savings world. Standard contribution limits will apply the same as all IRAs – currently $5,500, plus $1,000 for those 50 and up. Once your account reaches $15,000 in value, it has to be rolled over into a private-sector Roth IRA.
SEP IRA contribution limits rise
Self-employed folks accumulating retirement money in a SEP IRA will see their contribution limits rise from $52,000 in 2014 to $53,000 in 2015 and 2016, with related compensation limits rising from $260,000 to $265,000. These numbers apply to solo 401(k)s, too.
Have questions about how some of these and other changes may affect you? Schedule a consultation and let’s discuss your options.