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Want to Save More for Retirement? IRS Bumps Up Limits for 2015

/ Source: CNBC.com

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Taxpayers are about to get a bit more elbow room for retirement savings. Many contribution limits for employees with tax-favored retirement savings accounts were expanded for 2015, the Internal Revenue Service said Thursday. The maximum for contributions in the government's Thrift Savings Plan, private sector 401(k)s and other comparable programs have been raised to $18,000, up from $17,500 in 2014 and 2013. For people over 50 years old, the "catch-up contribution" threshold has been increased from $5,500 to $6,000.

As people "progress in their careers and earnings progressively go up," it will be increasingly important for older investors to max out the $24,000 limit, said Joe Ready, director of Wells Fargo Institutional Retirement and Trust. That's the combined total investment limit for people 50 and older — $18,000 for the 401(k) plus $6,000 for catch up. If a worker is investing in both an after-tax Roth IRA (where withdrawals are tax-free), as well as a pretax program, then the contribution limit applies to the amalgamation of both accounts, the IRS said.

Some programs are unchanged. For Individual Retirement Accounts, the $5,500 limit will stay the same for 2015. Annual benefits from a defined benefit plan will stay at $210,000.

Here is the IRS's full list of pension plan adjustments for 2015.

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