Recently, the IRS announced cost of living adjustments affecting dollar limitations for retirement plans for next year. Since the Consumer Price Index “did not meet the statutory thresholds”, 401(k) and IRA contribution limits remain unchanged from 2013.
401(k) Plans – The $17,500 annual contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan, remains the same for 2014 as it was for 2013. In addition, the catch-up contribution allowed for anyone age 50 and older remains the same at $5,500.
Solo 401(k) Plans & SEP IRAs – If you are self-employed and have one of these plans, you can save $52,000 next year, up $1,000 from 2013. The new compensation limit used in the savings calculation is $260,000, up from $255,000.
Defined Benefit Plans – The limitation on the annual benefit of a defined benefit plan increases from $205,000 in 2013 to $210,000 in 2014.
IRAs – Contribution levels for IRAs remain at $5,500, the same as 2013. Since catch-up contributions are not subject to inflation adjustments, that remains at $1,000 as well.
Deductible IRA Phaseouts – In 2014, the deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $60,000 and $70,000, up from $59,000 and $69,000 in 2013. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $96,000 to $116,000, up from $95,000 to $115,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $181,000 and $191,000, up from $178,000 and $188,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000. Note, even if you earn above these amounts, you can still contribute to an IRA, it will just be non-deductible.
Roth IRA Phaseouts – Next year, the AGI phase-out range for taxpayers making contributions to a Roth IRA is $181,000 to $191,000 for married couples filing jointly, up from $178,000 to $188,000 in 2013. For singles and heads of household, the income phase-out range is $114,000 to $129,000, up from $112,000 to $127,000.
SIMPLE IRA – The limit for SIMPLE IRAs is $12,000, the same as last year. The catch-up limit remains at $2,500.