Looking forward to save more in 2015 than 2014, the year just gone by? Don’t forget to take a fresh look at your retirement saving plan.
In 2015, many of the pension plan limitations have been “changed” by the Internal Revenue Service (IRS).
With new rules in place, savers have the opportunity to gain from the changes in Social Security and Medicare programs on account of the annual cost-of-living adjustment.
How much you can save in your retirement accounts
Retirement Benefits Outlook – 2015:
- As compared to 2014, the maximum limit for personal contributions is up $500 this year. Your 2015 401(k) contribution limit is $18,000 if you are under 50.
- The catch-up contribution limit for people age 50 and older is now $6,000 in 2015 – v.s. $5,500 for previous years.
- For the self-employed, the same limit applies if saving in a solo 401(k) or SEP IRA. The cap for SIMPLE plan savers is set at $12,500.
- If one is not having a plan at work, he or she can still put up to $5,500 in a traditional or Roth IRA.
Individual Retirement Accounts (IRAs)
- This year, there is “no change” in IRA contribution limit and it remains at $5,500. The additional catch-up contribution limit for individuals aged 50 and over also remains $1,000. But this is not all. Here’s why?
- An individual worker with a retirement account at work can claim a tax deduction for making a traditional IRA contribution until his or her modified adjusted gross income (AGI) is between $61,000 and $71,000 in 2015, up $1,000 from 2014.
- Married couples with a retirement account at work can claim a tax deduction for making a traditional IRA contribution until their modified AGI is between $98,000 and $118,000 in 2015, up $2,000 from 2014.
- Spouses without a workplace retirement plan who are married to someone with a 401(k) can claim the IRA contribution tax deduction until their income is between $183,000 and $193,000 in 2015.
- The Roth IRA income limit is also up by $2,000 in 2015. It is between $116,000 and $131,000 for individuals and $183,000 to $193,000 for married couples.
As compared to 2014, Saver Credit limits have been hiked between $500 and $1,000 in 2015.
- Individual workers with a 401(k) or IRA are eligible for the saver’s credit if their AGI is less than $30,500 in 2015, an increase of $500 over last year.
- The heads of household are eligible for the saver’s credit if their AGI is less than $45,750 in 2015, which is an increase of $750 over last year.
- Married couples are eligible for the saver’s credit if their AGI is less than $61,000 in 2015, which is an increase of $1000 over last year.
New retirement account
Haven’t saved for Retirement? Save the myRA way!
Those who find saving for retirement complicated, the Treasury has designed a new retirement account, myRA, which lets an individual set savings goal and decide how much he or she wants to save. One can even start from $2 per month.
You can open myRA account if
- You’re a wage earner without access to a retirement plan at work.
- You earn less than $129,000 per year (less than $191,000 per year if you’re a married couple filing jointly).
myRA’s main points:
- These Roth accounts will not go down in value as the investment is backed by the Treasury.
- These accounts are funded with after-tax dollars via payroll deduction.
- They are not tied to your job.
- myRA can be used for up to 30 years or until their account balance hits $15,000, after which the balance will transfer to a private-sector retirement account.
Making more from savings with a Self-Directed IRA LLC
A self-directed IRA means you direct the investments of the IRA.
- Choosing the right Self-directed IRA custodian is very impotant – you can save one thousands of dollars a year.
- By using an IRA LLC, you take checkbook control, thus lowering your annual custodial fees. You are the decision make.
- Whenever you get a good deal, an IRA LLC allows you instant access to your investment dollars.
- LLC’s are limited liability companies and offer a degree of liability protection from creditors. They also allow the IRA owner to be inocuous if desired.
Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He brings over 30 years of diverse experience as a financial advisor. Rick takes great pride in giving honest and very experienced advice. Rick can readily converse with business owners and people looking to take control of their retirement accounts.