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IRA Contribution Limits same for 2015, Increased Savings Opportunities May Still Be Available
January 26, 2015Some taxpayers might still have a slightly bigger opportunity to take advantage of the tax benefits of an IRA in 2015.
The annual IRA contribution limit is adjusted for inflation annually, but it generally increases only in increments of at least $500 and, unfortunately, hasn’t gone up since 2013. So for 2015, the limit remains at $5,500, plus an additional “catch-up” contribution limit of $1,000 for taxpayers age 50 or older.
Nevertheless, some taxpayers might still have a slightly bigger opportunity to take advantage of the tax benefits of an IRA in 2015. This is because the modified adjusted gross income (MAGI) phaseout ranges that limit a taxpayer’s ability to deduct traditional IRA contributions or to contribute to a Roth IRA have gone up for 2015.
Traditional IRAs
MAGI phaseout ranges apply to the deductibility of contributions only if the taxpayer (or his or her spouse) participates in an employer-sponsored retirement plan. Taxpayers with MAGIs within the applicable range can deduct a partial contribution; those with MAGIs exceeding the applicable range can’t deduct any IRA contribution.
Traditional IRA Deduction Phaseouts
| Filing Status | 2014 | 2015 |
|---|---|---|
| Married filing jointly: a spouse who participates in an employer-sponsored plan | $96,000–$116,000 | $98,000–$118,000 |
| Married filing jointly: a spouse who doesn’t participate in an employer-sponsored plan | $181,000–$191,000 | $183,000–$193,000 |
| Single or head of household who participates in an employer-sponsored plan | $60,000–$70,000 | $61,000–$71,000 |
If your deduction is reduced or eliminated, you still can make nondeductible traditional IRA contributions. Nondeductible traditional IRA contributions may be beneficial if your MAGI is also too high for you to contribute (or fully contribute) to a Roth IRA. You can then consider converting the traditional IRA to a Roth IRA.
Roth IRAs
The MAGI phaseout ranges for contributing to a Roth IRA are higher than for deducting traditional IRA contributions. If your MAGI falls within the applicable range, you can make a partial contribution. If it exceeds the top of the range, you can’t make a contribution.
Roth IRA Contribution Phaseouts
| Filing Status | 2015 | 2015 |
|---|---|---|
| Married filing jointly | $181,000–$191,000 | $183,000–$193,000 |
| Single or head of household | $114,000–$129,000 | $116,000–$131,000 |
More to Consider
Be aware that married taxpayers filing separately are subject to much lower phaseout ranges for both traditional and Roth IRAs. Other rules and limits also apply to IRA contributions that you need to be aware of before contributing. Finally, don’t forget that there’s still time to make 2014 IRA contributions — the deadline is April 15, 2015. To learn more about how to make the most of tax-advantaged retirement saving, please contact us.
