Contribution limits for employees in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan will increase from $17,500 to $18,000 next year, the IRS announced Thursday.
The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the TSP will go from $5,500 to $6,000.
The limit on annual contributions to an IRA remains unchanged at $5,500. 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.
The limit on maximum contributions to a defined contribution plan, including the employer’s match, will be raised to $53,000 in 2015, up from $52,000.
Also, the amount of employee compensation that can be considered in calculating pension benefits and contributions to defined contribution plans will rise to $265,000 from $260,000.
Contribution limits are tied to inflation and are reviewed each year. Last year, the Consumer Price Index had not climbed enough to trigger an increase in 401(k) and IRA limits.
For next year, deductions for IRA contributions for individuals and couples who also participate in employer-sponsored defined contribution plans will be phased out only after adjusted gross income falls between $61,000 and $71,000. That is a $1,000 increase from last year.
For married couples filing joint tax returns, the IRA deduction phases out when AGI falls between $98,000 and $118,000, when the contributing spouse is also a participant in an employer-sponsored plan. That is an increase of $2,000 over the previous year.
IRA contributors not covered by a workplace plan, but whose spouses are, will have their deduction phased out when the couple’s AGI reaches $183,000 to $193,000, also an increase of $2,000.
The AGI phase-out range for Roth IRAs will also see COLA changes in 2015, increasing to $183,000 to $193,000 for married couples filing jointly. Singles and heads of households will see the phase-out range increase to $116,000 to $131,000, up $2,000 from last year.
Click here for more details on the IRS website.