IRS and Social Security Administration Release Several Key 2015 Numbers

October 27, 2014

IRS Adjustments

The IRS has announced cost-of-living adjustments impacting 2015 dollar limitations for retirement plans. Many limitations remain unchanged because the increase in the index did not meet the statutory thresholds that trigger their adjustment.

401(k) contribution limit for elective deferrals has increased:

2014

2015

$17,500

$18,000


401(k), 403(b), and most 457 plan catch-up contribution limit (employers aged 50 and over) has increased:

2014

2015

$5,500

$6,000


Note: The contribution limit for IRAs remains unchanged at $5,500, as does the catch-up contribution limit for those aged 50 and over ($1,000).


Phase-Out for Traditional IRA Contribution deduction has increased (modified AGI):

 

2014

2015

Single/HoH (workplace plan)

$60K-70K

$61K-71K

MFJ (one covered by workplace plan makes contribution)

$96K-116K

$98K-$118K

MFJ (one not covered by workplace plan makes contribution)

$181K-191K

$183K-$193K

Married filing separately (covered by a workplace plan)

$0-10K

$0-10K


Phase-Out for Roth IRA Contribution deduction has increased (modified AGI):

 

2014

2015

Single/HoH (workplace plan)

$114K-129K

$116K-131K

MFJ

$181K-191K

$183K-$193K

Married Filing Separately

$0-10K

$0-10K


Social Security Administration Adjustments

The Social Security Administration has also announced several adjustments.

 

Wage Base for Social Security has increased.

2014

2015

$117,000

$118,500

Bottom line: A self-employed person earning at least $118,500 in net earnings will pay $14,694 for the social security portion of the self-employment tax in 2015. The Medicare portion (2.9%) of the self-employment tax has no upper limit).


The nanny tax threshold remains at $1,900.

Household employers are not liable for FICA tax on household employees unless wages exceed $1,900.


A quarter of coverage cost of living adjustment was made.

2014

2015

$1,200

$1,220

*This number increases the lower and upper limits under optional methods of calculating self-employment tax.


The farmer’s optional computation method was adjusted.

For 2015, an individual may use the farm optional method to calculate his net self-employment earnings only if (a) his gross farm income was not more than $7,320 or (b) his net farm profits were less than $5,284.


The cost of living adjustment for social security recipients is 1.7%. This increase in benefits will kick in in January 2015.

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