For ambitious savers, the New Year will bring good news. Americans will be able to save more money in a variety of retirement accounts in 2015. Here is a rundown on what you can contribute beginning on January 1:
The maximum annual contribution limit for 401(k) and 403(b) retirement accounts, as well as most 457 plans, will increase $500. The new contribution ceiling will be $18,000. Workers participating in 401(k) plans, who are at least 50 years old, will be able to stuff even more money into their accounts. The so-called catch-up provision allows eligible workers to contribute an extra $6,000, which represents an increase of $500 from 2014.
Small business owners and the self-employed can also squirrel away more for retirement. Investors with a SEP-IRA or a Solo 401(k) can save a maximum of $53,000 in 2015. That’s a $1,000 hike from 2014. How much an investor can sink into one of these accounts will depend on a formula that allows participants to invest a certain percentage of their salaries.
For the third year in a row, the yearly contribution ceilings for regular and Roth IRAs, which are subject to inflation adjustments, remain stuck at $5,500. The IRA catch-up provision is also unchanged at $1,000 for Americans who are 50 years of age or older. Keep in mind that you can qualify to contribute the extra amount if you are 50 years old by the last day of the calendar year.
In 2015, it will be a bit easier to qualify for a Roth IRA. Starting next year, you will qualify to invest in a Roth if your modified adjusted gross income as a single individual equals or exceeds $131,000. The cut-off modified AGI for married couples filing jointly is $193,000. Those ceilings represent a $2,000 bump in income for Roth eligibility. There is a phase-out income range for the Roth. To contribute the full amount, you must make less than $183,000 when married filing jointly and less than $116,000 for an individual.
If you are covered by a workplace retirement plan, you are eligible to obtain a full tax deduction when contributing to a traditional IRA if your modified AGI doesn’t exceed $61,000 (single) or $98,000 (married filing jointly). If you aren’t in a workplace plan, you can capture a full tax deduction when contributing to a traditional IRA if your modified AGI doesn’t exceed $183,000 (married filing jointly.) If you are single and not covered by an employee plan, you can qualify for the full deduction regardless of your modified AGI.