Retirement Planning in 2015

2015 presents a number of changes taking place with retirement accounts.

In 2015 you will be able to contribute $500 more per year to your 401(k), raising the yearly contribution limit to $18,000. Contribution to traditional IRAs and Roth IRAs remain unchanged at $5,500 per year for those under the age of 50, and $6,500 for those above the age of 50.
Also increasing are IRA Income limits. The tax deduction for making traditional IRA contributions phases out for those who also have a workplace retirement account. The phase out for this deduction now begins at $61,000 and ends at $71,000 for individuals. For couples it begins at $98,000 and ends at $118,000. This is up $1,000, and $2,000 respectively from 2014. For those who don’t have a workplace savings account but are married to someone who does, the phase out beings at $183,000 and ends at $193,000.

The income limit for contribution to a Roth IRA is now $116,000 to $131,000 for individuals, and $183,000-$193,000 for married couples. An increase of $2,000 from last year. Putting money into a Roth IRA is highly recommended for many investors, because it has the amazing ability to accumulate value tax free. For those who have too high an income to contribute to a Roth IRA, you can convert a traditional IRA into a Roth IRA, but you will have to pay federal taxes on it first.

Beginning this year investors can only make one rollover from one IRA to any other kind of IRA in any 12-month period. Making a second conversion in that 12-month period could result in hefty tax penalties including a 10 percent early withdrawal penalty and a 6 percent per year excess contributions tax as long as the rollover remains in the IRA.

Keep all of this in mind as you get ready to confront what is very likely to be an interesting and difficult to predict financial year.

Want to learn more about Roth IRA planning?  Visit:—Roth-IRA-Planning.pdf

Davis and Hodgdon Associates CPAs has been assiting nonprofits, individuals and businesses with tax and accounting services in the Burlington Vermont Metro area for more than 20 years. If you have any questions or concerns please feel free to call 802.878.1963 or email [email protected].

William Cruse, Associate Accountant, Davis & Hodgdon Associates CPAs

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