401(k) Contribution Limit Increases to $18,000
The IRS has announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2015. Highlights include:
The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), and most 457 plans is increased from $17,500 to $18,000. o The catch-up contribution limit for those aged 50 and over is increased from $5,500 to $6,000. The limit on annual contributions to an individual retirement arrangement (IRA) remains unchanged at $5,500.
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.
For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $98,000 to $118,000, up from $96,000 to $116,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple's income is between $183,000 and $193,000, up from $181,000 and $191,000.
Additional information on the adjusted and unchanged limitations is available in the IRS cost-of-living adjustment table.