2015 IRA Contribution Limits
How Much Could You Put in Your IRA in 2015?
How much can you contribute to an individual retirement account each year? It depends on the year. That's because the maximum amount you can invest, also known as the contribution limit, changes with cost-of-living inflation every year or two. Contribution limits for IRAs will remain relatively unchanged from 2014 to 2015, but there are some adjustments. Retirement savers, get ready to learn your limits.
Contribution Limits for IRAs in 2015
The contribution maximum in 2015 is $5,500, unchanged from 2014. The same is true for the catch-up contribution of $1,000 for individuals age 50 or older. That means the total maximum for the year is $6,500.
Deductible IRA Limits 2015
Of course, the best kind of IRA contributions is tax-deductible IRA contributions. Whether you qualify for a partial or full income tax deduction for your contribution will depend on a couple of factors, including your income and whether you participate in another tax-favored plan. Income limits also change over time.
The deduction amount in 2015 starts to phase out for singles or heads of household with adjusted gross incomes (AGI) of between $61,000 and $71,000, up from $60,000 to $70,000 in 2014. That means if you earn less than $61,000 and do not have a 401(k) or similar plan through work, you will likely qualify for a full deduction. If your AGI is greater than $61,000 but less than $71,000, you could qualify for a partial deduction. Individuals with incomes greater than $71,000 will not likely qualify.
In 2015, the threshold for married couples also increased. If you are married and file jointly, and you have a 401(k) or related plan at work, deductions begin to phase out at $98,000 and are capped at $118,000. If you are not covered by a workplace 401(k) but your spouse is, you may qualify for a deduction if your combined AGI is less than $183,000. The deduction amounts phase out between $183,000 and $193,000 in 2015.
If you are married filing separately, and you have a retirement plan at work, your deductions phase out between $0 and $10,000.
2015 Roth IRA Contribution Limits
Don't qualify for an IRA tax deduction? Try a Roth IRA instead. Roth IRA contribution limits also remained the same in 2015. You can contribute up to $5,500 in a Roth if you are younger than age 50, or $6,500 if you are older. But Roths are different than traditional IRAs. Roth IRA contributions are not tax-deductible, they are made after tax. Once in there, however, the money is generally not taxed again. That's right, not taxed. Even when you pull it out during retirement. While there are some restrictions, distributions from Roth IRAs are tax-free.
Even better, the contributions you make to a Roth IRA (although not the investments earnings) can be taken out tax-free before retirement.
To qualify for a Roth IRA, there are income limits. You cannot contribute in 2015 if you make an AGI of more than $131,000 as a single person or $193,000 as a married couple filing jointly.
Self-Employed IRA Contribution Limits 2015
The good news for retirement savers who own their own business is that self-employed IRA limits have increased for 2015. The limit for SIMPLE IRAs is $12,500 in 2015, up from $12,000 in 2014. Catch-up contributions for SIMPLE IRAs increase to $3,000 (from $2,500) in 2015.
If you have a SEP IRA, you may contribute up to $53,000, or 25% of up to $265,000 in gross income in 2015.
Business owners can also have their own Individual 401(k) or Solo 401(k). In 2015, limits on 401(k)s were up to $18,000. The 401(k) catch-up contribution limit is also up. In 2015, contributors age 50 or older can add $6,000 to an individual 401(k), for a maximum contribution of $24,000. (That is not including potential "employer" matching contributions that you can make for yourself.
Remember, an IRA can be a great tax planning tool, even at the last minute. Contributions for 2015 can be made anytime before you file your taxes for the year. That means you have until April 15, 2016, to make a contribution and take any applicable tax deduction. If you have a self-employed IRA and file an extension, you can make a prior year contribution before October 15, 2016.
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