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.
For more information on the contribution increases including phase out levels and the Retirement Savers Tax Credit see CNN Money ‘s article here or call our office.
Stephen Osborne, CPA
Certified Public Accountant