Dec 2

IRS PictureLast month, the Internal Revenue Service announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2013. This month, adjustments were announced for tax year 2014.  A summary of some of these adjustments follows:

           For 2013 and 2014, the elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is increased from $17,000 to $17,500.

          For 2013 and 2014, the catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $5,500.

          For 2013 and 2014, the limit on annual contributions to an Individual Retirement Arrangement (IRA) rises to $5,500, up from $5,000 in prior years. 

          For 2013, 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 $59,000 and $69,000, up from $58,000 and $68,000 in 2012.  For 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.

          For 2013, the income phase-out range for married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, is $95,000 to $115,000, up from $92,000 to $112,000.  For 2014, the income phase-out range is $96,000 to $116,000, up from $95,000 to $115,000.

          For 2013, the deduction for an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, is phased out if the couple’s income is between $178,000 and $188,000, up from $173,000 and $183,000.  For 2014, the deduction is phased out if the couple’s income is between $181,000 and $191,000. 

–         For 2013, the AGI phase-out range for taxpayers making contributions to a Roth IRA is $178,000 to $188,000 for married couples filing jointly, up from $173,000 to $183,000 in 2012.  For 2014, the AGI phase-out range is $181,000 to $191,000.

–         For 2013, the income phase-out range for singles and heads of household making contributions to a Roth IRA is $112,000 to $127,000, up from $110,000 to $125,000. For 2014, the income phase-out range is $114,000 to $129,000.