Good news for you retirement savers out there making the maximum allowed contribution to your 401(k) – In 2015 you will be able to contribute an additional $500 to your retirement plan, now maxing out at $18,000. Additionally, if you are age 50 or older, your allowed “catch-up” contribution will increase from $5,500 to $6,000, bringing your maximum 2015 401(K) investment to $24,000 before any employer match.
Contribution limits are reviewed annually by the IRS and are periodically increased based on corresponding increases in the Consumer Price Index (CPI), a measure of inflation. While 401(K) contribution limits will see an increase in 2015, the agency apparently did not see a large enough swing in the CPI to merit an increase to Traditional and Roth IRA limits which will remain unchanged at $5,500 (as will the $1,000 IRA “catch-up” amount). However, the IRS did raise the income levels that determine who qualifies for a full deduction on IRA contributions which means more savers will likely qualify.
Stephen Osborne, CPA
Certified Public Accountant