IRS issues retirement plan adjustments that increase 401(k) limits October 23, 2014 Share Subscribe RFP [Download the PDF] The IRS has announced its annual cost-of-living adjustments for retirement and pension plans, and taxpayers will be able to contribute more to their 401(k) plans in 2015. Tax laws require the IRS to adjust the dollar amounts of dozens of tax provisions each year to account for inflation. IR-2014-99 includes an increase from $17,500 to $18,000 in the amount taxpayers can contribute to qualified retirement plans such as 401(k)s, 403(b)s and some 457 plans. The limits on contributing to an individual retirement account (IRA) will remain at $5,500. The IRS hasn’t yet released its annual revenue procedure with the inflation adjustments for the tax brackets and other tax items, but it should be released shortly. The Social Security Administration has announced separately that the wage cap for applying Social Security tax will increase from $117,000 in 2014 to $118,500 in 2015. See the following for more details on the key retirement plan adjustments. Key retirement plan adjustments Qualified retirement plans — The 2015 elective contribution limits on Section 401(k) and Section 403(b) plans (and similar plans limited under Section 402(g)(1)) are increased to: $18,000 (up $500) $6,000 (up $500) for catch-up contributions for those 50 and older IRA contribution limits — The amount taxpayers can contribute to an IRA remains unchanged in 2015 at: $5,500 $1,000 for catch-up contributions for those 50 and older IRA deduction limits — The 2015 phaseout ranges for the deductibility of IRA contributions are: $61,000 to $71,000 (up $1,000) for single and head-of-household filers covered by workplace plans $98,000 to $118,000 (up $2,000) for joint filers when a contributing spouse is covered by a workplace plan $183,000 to $193,000 (up $2,000) for joint filers when the contributor’s spouse is covered by a work plan, but the contributor isn’t covered Roth IRA income limits — The phaseouts for contributing to a Roth IRA in 2015 are: $183,000 to $193,000 (up $2,000) for joint filers $116,000 to $131,000 (up $2,000) for single and head-of-household filers Pension plans — The 2015 annual benefit limit under a defined benefit plan under Section 415(b)(1)(A) will remain unchanged at $210,000. The limit for defined contribution plans under Section 415(c)(1)(A) will increase by $1,000, to $53,000. Health savings accounts The IRS released the inflation adjustments for health savings accounts (HSAs) earlier in the year (Rev. Proc. 2014-30). The 2015 limits on HSA contributions are: $3,350 (up $50) for self-only coverage $6,650 (up $100) for family coverage The 2014 requirements for high-deductible health plans paired with HSAs are: $1,300 (up $50) minimum deductible for self-only coverage $2,600 (up $100) minimum deductible for family coverage $6,450 (up $100) limit on out-of pocket expenses for self-only coverage $12,900 (up $200) limit on out-of- pocket expenses for family coverage Contact Eddie Adkins +1 202 521 1565 firstname.lastname@example.org Tax professional standards statement This document supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the subject of this document, we encourage you to contact us or an independent tax adviser to discuss the potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this document may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this document is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.