I can’t believe we’re almost a month into 2015…I feel like we were just celebrating New Years. Lucky for us, 2015 is off to a good start with the US Government sweetening the deal for retirement benefits. Here are some changes you need to know about:
401(k)s: The 401(k) contribution limit will increase by $500, meaning you can contribute a maximum of $18,000 pre-tax in 2015. If you’re 50 or older, the catch-up contribution increases by $500 to $6,000, meaning the maximum you can contribute if you’re 50+ is $24,000. If you were already contributing the maximum amount in 2014, make sure you update your withholdings for the extra amount this year by contacting your employer’s payroll or HR department. To put this additional savings in perspective, if you’re under 50 and in the 25% tax bracket, contributing the maximum to your 401(k) in 2014 saved you $4,375 off your tax bill. In 2015, this will increase to $4,500. Less money you owe for taxes plus more money in your retirement accounts = a WIN-WIN!
IRAs: The IRA contribution amounts are unchanged for 2015, with a maximum of $5,500 if you’re under 50, and a catch-up of $1,000 more if you’re 50+.
MyRA: The Treasury is now offering a new type of retirement account, the MyRA, which is funded with after-tax dollars (similar to a Roth IRA) through a payroll deduction. Unlike traditional retirement accounts, these funds are guaranteed by the US Government to never lose value. The MyRA will be available to workers with annual income of less than $129,000 for individuals and $191,000 for married couples. They can use their account for up to 30 years or until the balance hits $15,000, at which point it will transfer to a private sector retirement account.
Social Security: Social Security recipients will receive 1.7% bigger payments this year due to a cost of living adjustment. Most workers will continue to contribute 6.2% of their earnings to the Social Security System, but the taxable income limit will increase from $117,000 to $118,500 this year.
Medicare: The standard Medicare B premium will remain $104.90 monthly in 2015, although high-income beneficiaries pay more, and the deductible is unchanged at $147 a year. The Medicare Part A hospital inpatient deductible will increase from $1,216 in 2014 to $1,260 in 2015. Medicare Part D premiums vary by plan and are expected to increase by 4 percent to an average $38.83 in 2015.
Photo Credit: American Advisors Group