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October 23, 2014 at 10:13 AM
The Internal Revenue Service announced on Thursday cost of living contribution increases for pension and other retirement plans for tax year 2015, which includes $500 increases to 401(k)s, 403(b)s and most 457 plans — from $17,500 to $18,000 — as well as catch-up contributions for employees aged 50 and older.
The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan will increase from $5,500 to $6,000.
The limit on annual contributions to an individual retirement account remains unchanged at $5,500, while 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.
In addition, the IRS said that the deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $61,000 and $71,000, up from $60,000 and $70,000 in 2014.
A recent Government Accountability Office report found that for tax year 2011 (the most recent year available), an estimated 43 million taxpayers had IRAs with total reported fair market value of $5.2 trillion. About 99% of those taxpayers had aggregate IRA balances (including inherited IRAs) of $1 million or less, GAO says.
