IRS Increases 401(k) Contribution Limits for 2015

Today the IRS announced cost-of-living adjustments to various retirement plans, including 401(k), 403(b), 457, federal government Thrift Saving and IRA plans.  While the intent of this post is not to regurgitate the news, it should be noted that IRA limitations were unchanged.  However, for those of you who participate in a 401(k) plan or self-directed Solo 401(k) plan, you should be happy to know that both the individual elective deferral contribution and “catch-up” contributions have been increased.  These changes are in effect for the 2015 year.  The following are of note:

  • Elective deferrals, or what most understand as employee contributions, was increased from the current amount of $17,500 to $18,000.  This positively affects 401(k), 403(b), 457 and federal Thrift Savings Plans.
  • For those of you over 50 years of age, the “catch-up” provision increased as well from $5,500 t0 $6,000.  In toto, the individual over 50 could contribute up to $24,000 in elective deferrals.
  • For those of you with IRAs, those amounts remained unchanged at $5,500 for individuals under the age of 50 and $6,500 for those over the age of 50.

The IRS made additional changes to various types of plans.  You can review the totality of the new provisions for 2015 by linking directly to the IRS press release.

As always the information provided is intended to be educational and informative in nature.  It is not intended, nor should it be interpreted as, any form of tax, legal, financial or investment advice.