It’s a new year, which means it’s time to reflect on past priorities and establish a plan for the months ahead — particularly from a financial perspective. To ensure you stay on track to meet your goals in 2015, there are five important law changes you need to keep in mind:
1. Increased 401(k) Contribution Limits
In 2015, the contribution limit for 401(k) retirement plans is increasing by $500 to a total of $18,000, while the catch-up contribution for those age 50 and older has been upped from $5,500 to $6,000. These amounts also apply to 403(b) plans, most 457 plans and the federal government’s Thrift Savings Plan.
2. Limitations on Individual Retirement Account (IRA) Rollovers
Starting January 1, you’re limited to one rollover from one IRA to another IRA every 12 months, regardless of how many IRAs you own. Taking a second rollover within the same year could result in tax consequences — and money out of your pocket.
3. Increased Social Security Benefits
Social Security recipients will see their checks increase by 1.7% this year, due to the annual cost-of-living adjustment. This translates into an additional $22 each month for the average retiree, for a total of $1,328 per month. The average benefit for retired couples will increase by $36 to $2,176 per month.1
4. Higher Income Limits for Traditional IRA Contributions
This year, the income limits for deductible contributions to traditional IRAs will change, based on whether you and/or your spouse are eligible to participate in an employer-sponsored retirement plan.
If you have a workplace retirement plan, you can claim a tax deduction for making a traditional IRA contribution until your modified adjusted gross income is between $61,000 and $71,000 for individuals and $98,000 and $118,000 for couples — up $1,000 and $2,000, respectively, from 2014. If you don’t have a workplace retirement plan, but your spouse does, you can claim the deduction until your income is between $183,000 and $193,000.
5. Higher Income Limits for Roth IRA Contributions
In 2015, the income limits for Roth IRA contributions will increase for married couples with a modified adjusted gross income between $183,000 and $193,000, up from $181,000 and $191,000, respectively. For individuals and heads-of-household, the range increases to $116,000 and $131,000, up from $114,000 and $129,000 in 2014.
To discuss how these changes may impact your financial plan, please call 888-520-3040 or search for an advisor at an office near you, using our interactive map: hewinsfinancial.com/about-us
