You can contribute only so much to your retirement accounts each year. Knowing how much these amounts increase for the coming year makes good sense as you budget your saving and spending.
The Internal Revenue Service recently published the new contribution limits for various retirement plans for 2015. These limits are indexed to inflation and sometimes do not increase much year over year – and sometimes not at all. The coming year brings a few hikes for contribution amounts as well as increased income limits for most types of accounts after virtually no changes to the contribution amounts in 2014.
Individual retirement accounts. The annual contribution limit for IRAs (both traditional and Roth) remains at $5,500 for 2015, the second consecutive year without an increase. The catch-up contribution amount for folks 50 and older also remains at $1,000.
The income limits for eligibility for traditional (deductible) IRAs increase slightly. If you’re single, your annual modified adjusted gross income (MAGI) must be less than $61,000 for a full deduction, with phased deduction allowable up to an MAGI of $71,000. This increase is $1,000 over last year.
If you use the married filing jointly status (MFJ) and are covered under a retirement plan from your employer, your MAGI limit jumps to $98,000 – phased out at $118,000 – a $2,000 increase over last year’s limits. If you file your tax return MFJ and aren’t covered with a workplace retirement plan but your spouse is covered, the MAGI limit for deduction is $183,000, phased out at $193,000; this is also an increase of $2,000 over 2014’s limits.
The income limits for Roth IRA contributions also goes up. Single filers with a MAGI less than $116,000 can make a full contribution, phased out up to a MAGI of $131,000, an increase of $2,000 at each end of the range. For married couples filing jointly, the MAGI limits are $183,000 to $193,000 for Roth contributions, up $2,000.
Other plans. For traditional employer-based 401(k)s, the amount of deferred income allowed increases. For 2015, employees can defer up to $18,000 with a catch-up of $6,000 for those older than 50 (both figures increased $500). If you work for a governmental agency that offers a 457 plan in addition to a 401(k) or 403(b), you can defer as much as $36,000 plus catch-ups, for a total of $48,000.
The limits for contributions to Roth 401(k) and Roth 403(b) are the same as for these plans’ traditional counterparts. You can contribute up to the limit for either a Roth or a traditional plan or a combination of the two.
Deferral limits for savings incentive match plan for employees (SIMPLE) IRAs also increases $500, to a maximum of $12,500. The catch-up rises to $3,000 for folks at or older than 50.
Income limits for contributing to a plan and receiving the saver’s credit, which helps offset part of the first $2,000 you voluntarily contribute to IRAs and to 401(k) s and similar plans, likewise jumps. The MAGI limit for MFJ climbs to $61,000 from $60,000, for singles to $30,500 from $30,000 and for heads of household to $45,750 from $45,000.
This table details further how the saver’s credit applies:
Amount of Credit
Married Filing Jointly
Head of Household
Single/Others
50% of first $2,000 deferred
$0 to $36,500
$0 to $27,375
$0 to $18,250
20% of first $2,000 deferred
$36,501 to $39,500
$27,376 to $29,625
$18,251 to $19,750
10% of first $2,000 deferred
$39,501 to $60,000
$29,626 to $45,750
$19,751 to $30,500
Filing Status/Adjusted Gross Income for 2015
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Jim Blankenship, CFP, EA, is an independent, fee-only financial planner at Blankenship Financial Planning in New Berlin, Ill. He is the author of An IRA Owner’s Manual and A Social Security Owner’s Manual. His blog is Getting Your Financial Ducks In A Row, where he writes regularly about taxes, retirement savings and Social Security.
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