IRS Issues New Retirement Plan Rules
The IRS has released its retirement plan limitations for 2014, and while the contribution limits remain the same as 2013, the income phase-out ranges have increased.
Here are the contribution limits for 2014:
401(k), 403(b) and 457 plans: maximum contribution of $17,500 for those under 50; for those over 50, add a catch-up contribution of $5,500 for a total of $23,000.
IRAs: maximum contribution of $5,500, plus another $1,000 for those over the age of 50.
The ability to take tax deductions for contributions to a traditional IRA depend on whether you are contributing to an employer plan and how much you earn. Deductions are phased out when your adjusted gross income (AGI) exceeds a certain limit. The new limits for 2014 are:
Deductions for IRAs made by single and head-of-household filers phase out for those who are covered by a workplace plan and have AGIs between $60,000 and $70,000, up from $59,000 to $69,000 in 2013. That means you get a full deduction if you earn up to $60,000, and a partial deduction if you earn up to $70,000.
If you're married filing jointly and you contribute to a workplace plan, the income phase-out range is $96,000 to $116,000, up from $95,000 to $115,000 in 2013.
If you're married filing jointly and your spouse contributes to a workplace plan but you do not, the income phase-out range for deductibility of contributions is $181,000 to $191,000, up from $178,000 to $188,000 in 2013.
If you're married and filing separate returns, the phase-out range remains $0 to $10,000, the same level it's been for many years, and doesn't get a cost-of living adjustment.
The income limits for contributions to a Roth IRA are as follows:
Income phase-out ranges for married couples filing jointly who contribute to a Roth IRA are $181,000 to $191,000, up from $178,000 to $188,000 in 2013.
For married couples filing separately, the phase-out range remains $0 to $10,000, with no cost-of-living adjustment.
Single and head-of-household filers can earn up to $114,000 and contribute to a Roth IRA. The income phase-out range is $114,000 to $129,000, up from $112,000 to $127,000 in 2013.
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