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2015 IRA Contribution Limits

As the months of 2015 wisp away, now is a good time to think about what you or your loved ones have put away for tomorrow.  Saving for retirement should be a big goal for everyone.  And the earlier you start (or encourage your kids and grandkids to start), the more financially stable your retirement years will be.  I recently read an article that showed how much more a person would have at age 65 if they had contributed $2000 a year starting at 18 and ending at age 24, versus a person who started contributing the same $2000 at age 24, and continued contributing each year until age 65 – it was nearly a $1 million difference (the growth of the investments were presumed to be the same).

I do realize that the 18 year boat has sailed for most of us, but this is good to help urge the younger members of your family.  The IRS does limit how much you can put away for retirement, so you need to understand the limits in doing so.

There are several different thresholds to consider.  This year, the limit to contribute into your IRA or Roth IRA is unchanged at $5,500.  In addition, for those like me who are over age 50, there is a “catch-up” provision that also remains unchanged at $1,000.  For employees who participate in a 401(k), 403(b) and most 457 plans, the contribution limit is increased to $18,000 for 2015. That is good news to those that are able to contribute at the maximum level.   More good news for us older folk, the catch-up contribution for employees aged 50 and over has increased to $6,000.

The IRS also places restrictions on the deductibility of traditional IRA contributions.  2015 introduces some changes to the deductibility. The deduction begins to be phased out for single taxpayers and heads of household who are also covered by a work place retirement plan (e.g. 401(k)), and have a modified adjust gross income (“MAGI”) between $61,000 and $71,000.  If you are married and filing jointly and the spouse who makes the IRA contribution is also covered by a work place retirement plan, the deduction phase-out begins with MAGI $98,000 to $118,000.  For a married individual who files a separate return and who is also covered by a work place retirement plan, the phase-out range remains at the low income levels of $0 and $10,000.

Saving for retirement is important.  And there are important levels to understand based on many variables.  Understanding your contribution limits or restrictions is an important piece you’re your future planning.  The Morris Hall team understands these hurdles, and has put legal, financial and accounting in place to help you make the best choices.

At Morris Hall, PLLC we have focused our legal practice on estate planning for over 45 years.  Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects.  We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Carefree, Tucson, Oro Valley, Prescott, Sedona, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.


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