IRS Announces new 401(k) contribution max for 2015 ($18,000)
-
- Posts: 717
- Joined: Wed Mar 25, 2009 12:58 am
IRS Announces new 401(k) contribution max for 2015 ($18,000)
IRS Announces 2015 Pension Plan Limitations; Taxpayers May Contribute up to $18,000 to their 401(k) plans in 2015
IRA limits unchanged at $5,500
IRA limits unchanged at $5,500
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
It's great to start the morning with good news. Thanks.
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
and the catchup contribution remains at $5500?
thenextguy wrote:IRS Announces 2015 Pension Plan Limitations; Taxpayers May Contribute up to $18,000 to their 401(k) plans in 2015
IRA limits unchanged at $5,500
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Catchup is now $6000.
zvez wrote:and the catchup contribution remains at $5500?
-
- Posts: 821
- Joined: Wed Nov 04, 2009 8:45 am
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
To summarize from the link:
401k up $500 to 18000
Catch-Up up $500 to $6000
IRA unchanged at $5500 and IRA catch-up unchanged at $1000
Phase-Out ranges all up (check the link though, there are too many to summarize)
401k (etc) total maximum up $1000 to $53000
HCE status up $5000 to 120,000.
401k up $500 to 18000
Catch-Up up $500 to $6000
IRA unchanged at $5500 and IRA catch-up unchanged at $1000
Phase-Out ranges all up (check the link though, there are too many to summarize)
401k (etc) total maximum up $1000 to $53000
HCE status up $5000 to 120,000.
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
The SIMPLE-IRA limit is more relevant to me. From the link, it looks like that's going from 12k to 12.5k.
- SquawkIdent
- Posts: 929
- Joined: Tue Dec 23, 2008 6:14 pm
- Location: Planet Earth
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Thank you for posting that link.thenextguy wrote:IRS Announces 2015 Pension Plan Limitations; Taxpayers May Contribute up to $18,000 to their 401(k) plans in 2015
IRA limits unchanged at $5,500
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
TFB posted this change in his blog 2 months ago yet, calculation it early with very high degree of confidence. He does that every year btw.
http://thefinancebuff.com/2015-401k-403 ... imits.html
Edit: I added a link since it used to be that it was enough to type in "TFB blog" (The Finance Buff) for it to show up in Google search, but now The Firearm Blog comes out instead
http://thefinancebuff.com/2015-401k-403 ... imits.html
Edit: I added a link since it used to be that it was enough to type in "TFB blog" (The Finance Buff) for it to show up in Google search, but now The Firearm Blog comes out instead
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Thanks thenextguy for making me look good this morning. Coincidentally, the rep from my employer's plan is on site today doing employee education type presentations (great program we have here). As we passed in the hall and said hello, I said I heard the IRS announced a higher limit for next year. He said "really, I need to check that out. But if you know about it it's got to be right". Dang right...
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
That's good news, but I really wish they would raise the IRA limit, so I could put more into our Roths.
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Just note that most of these increases are indexed to inflation. That's obviously a good thing compared to being fixed nominal values, but it also means that it's not really good if they go up or bad if they don't, as the limits aren't actually changing in real dollars (aside from rounding error).
-
- Posts: 717
- Joined: Wed Mar 25, 2009 12:58 am
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Right. It's more for informational purposes. It really don't allow us to save more in real terms.Ungoliant wrote:Just note that most of these increases are indexed to inflation. That's obviously a good thing compared to being fixed nominal values, but it also means that it's not really good if they go up or bad if they don't, as the limits aren't actually changing in real dollars (aside from rounding error).
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Max It Out
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Whether its good or bad, nominal or real, informational or not, just starting a plan for most people is what matters and that is always good.thenextguy wrote:Right. It's more for informational purposes. It really don't allow us to save more in real terms.Ungoliant wrote:Just note that most of these increases are indexed to inflation. That's obviously a good thing compared to being fixed nominal values, but it also means that it's not really good if they go up or bad if they don't, as the limits aren't actually changing in real dollars (aside from rounding error).
Never in the history of market day-traders’ has the obsession with so much massive, sophisticated, & powerful statistical machinery used by the brightest people on earth with such useless results.
- Clever_Username
- Posts: 1915
- Joined: Sun Jul 15, 2012 12:24 am
- Location: Southern California
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Can someone explain to me why they aren't raising the IRA limit also? I'm sure there's a logical reason for it, I just don't get it.nwffdiver wrote:That's good news, but I really wish they would raise the IRA limit, so I could put more into our Roths.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_ |
|
I survived my first downturn and all I got was this signature line.
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Sure. It is due to Section 219(b)(5)(A) of Internal Revenue CodeClever_Username wrote:Can someone explain to me why they aren't raising the IRA limit also? I'm sure there's a logical reason for it, I just don't get it.nwffdiver wrote:That's good news, but I really wish they would raise the IRA limit, so I could put more into our Roths.
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Summary: Not enough inflation. They raise number whenever there has been enough change in the CPI to get to the next 500 number. Probably another 2 years or so til the next increase.serbeer wrote:Sure. It is due to Section 219(b)(5)(A) of Internal Revenue CodeClever_Username wrote:Can someone explain to me why they aren't raising the IRA limit also? I'm sure there's a logical reason for it, I just don't get it.nwffdiver wrote:That's good news, but I really wish they would raise the IRA limit, so I could put more into our Roths.
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
It will likely be several years before IRA limits are raised to $6000.
IRS rounds the IRA limit in increments of $500.
2014 the official number was $5610 ($5500 limit) so based on the new 2014 inflation estimate of 1.7%, 2015 # raises to $5705 (5500 limit).
It would likely would take 2.5% inflation rate for the next 2 years to hit $6000 by 2017 - If inflation is the same as it is now likely 2018 or 2019 before the IRA limit is raised.
IRS rounds the IRA limit in increments of $500.
2014 the official number was $5610 ($5500 limit) so based on the new 2014 inflation estimate of 1.7%, 2015 # raises to $5705 (5500 limit).
It would likely would take 2.5% inflation rate for the next 2 years to hit $6000 by 2017 - If inflation is the same as it is now likely 2018 or 2019 before the IRA limit is raised.
-
- Posts: 717
- Joined: Wed Mar 25, 2009 12:58 am
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Right. The difference between $17,500 and $18,000 is about 3%. Thus, we've been seeing increases about every two years for 401k, etc.randomguy wrote:Summary: Not enough inflation. They raise number whenever there has been enough change in the CPI to get to the next 500 number. Probably another 2 years or so til the next increase.serbeer wrote:Sure. It is due to Section 219(b)(5)(A) of Internal Revenue CodeClever_Username wrote:Can someone explain to me why they aren't raising the IRA limit also? I'm sure there's a logical reason for it, I just don't get it.nwffdiver wrote:That's good news, but I really wish they would raise the IRA limit, so I could put more into our Roths.
The difference between $5,500 and $6,000 is about 9%. It takes much longer for inflation to eat away at that.
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
And correct me if I'm wrong, but I believe it's only rounded down. So $5,999 would still translate into a $5,500 limit.medinme wrote:It will likely be several years before IRA limits are raised to $6000.
IRS rounds the IRA limit in increments of $500.
2014 the official number was $5610 ($5500 limit) so based on the new 2014 inflation estimate of 1.7%, 2015 # raises to $5705 (5500 limit).
It would likely would take 2.5% inflation rate for the next 2 years to hit $6000 by 2017 - If inflation is the same as it is now likely 2018 or 2019 before the IRA limit is raised.
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Is it ok to be excited that it will be a nice round number for contributions each month? The Type A is strong in me...
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
On the HCE limits, do you have to make that much to be classified or can a plan classify you as HCE based on the salary pool of participants? I.E., you make more than the vast majority, yet don't hit that #?
Always been curious on how it works,
Nice to see the 401k raised!
Always been curious on how it works,
Nice to see the 401k raised!
-
- Posts: 717
- Joined: Wed Mar 25, 2009 12:58 am
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
I get paid biweekly instead of semimonthly.mlipps wrote:Is it ok to be excited that it will be a nice round number for contributions each month? The Type A is strong in me...
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
.....
Last edited by Lynette on Wed Dec 06, 2017 9:02 am, edited 1 time in total.
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
confused...How will they count towards RMD? could you explain further?Lynette wrote:More money on which to pay RMDs! I'm exempt at the moment as my 401K is with my current employer. I'm not making Roth 401K contributions as they will count towards RMDs unless the money has been there for 5 years. I plan to retire in 4 years.
WHy are you exempt for 401k if I can ask/HCE?
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
.....
Last edited by Lynette on Wed Dec 06, 2017 8:33 am, edited 1 time in total.
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Thanks, the wiki has a number of articles which need to be updated.
- abuss368
- Posts: 27850
- Joined: Mon Aug 03, 2009 2:33 pm
- Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
- Contact:
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Thanks! If only IRAs would catch up or have the same limits.
John C. Bogle: “Simplicity is the master key to financial success."
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Wish I could, but I don't think the wife is up to the austerity required for that endeavor. I've maxed my 457B and our two ROTH IRA's for the last few years. Maxing the 403B and wife's 401K has proven to be beyond my willingness to scrimp and save.Toons wrote:Max It Out
Never underestimate the power of the force of low cost index funds.
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
I also have a SIMPLE-IRA with my employer, and I'm glad it's being raised a little bit at least. It has always frustrated me that I'm missing out on contributing several thousand extra dollars per year to my retirement fund vs. someone else with a 401(k). Does anyone know the fundamental reason why this is the case? It just seems strange to me, and possibly a little unfair, that I'm not able to stash away as much tax-advantaged funds for retirement, simply because my employer chose one plan over the other.bobbun wrote:The SIMPLE-IRA limit is more relevant to me. From the link, it looks like that's going from 12k to 12.5k.
- Clever_Username
- Posts: 1915
- Joined: Sun Jul 15, 2012 12:24 am
- Location: Southern California
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Thanks for the explanations everyone. I should have remembered that $500 is a larger percent of $5500 than $17500.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_ |
|
I survived my first downturn and all I got was this signature line.
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Easier said than done. Maybe one day though. In the meantime, I can dreamToons wrote:Max It Out
-
- Posts: 1626
- Joined: Tue Jun 24, 2014 8:54 am
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Determining HCEs by compensation limit is based on the prior year compensation. So, for example, if your compensation meets or exceeds HCE limit in 2014, you will be an HCE in 2015.853211 wrote:On the HCE limits, do you have to make that much to be classified or can a plan classify you as HCE based on the salary pool of participants? I.E., you make more than the vast majority, yet don't hit that #?
Always been curious on how it works,
Nice to see the 401k raised!
If you are a greater than 5% owner of the company, you are an HCE for all plan years in which you own at least 5% during that year, regardless or your compensation.
There is also a top-paid group election option that can potentially help limit HCEs for companies that have a lot of high earners (think lawyer, doctor, architectural firms) but you would still have to reach the limit to potentially be an HCE.
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Thanks for the heads up
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
My 401k offers index funds with expense ratios even lower than Vanguard's Admiral Shares, AND it offers some DFA funds. I don't make a ton of money, but I max it out because the fund choices are so good. I'm very happy for any increase in contributions limits.
I'm just a fan of the person I got my user name from
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
It surprises me how many new things I learn every month even after 3 yearsLynette wrote: I'm nearly 71 but I don't have to take RMD's as I'm working for the company where I have my 401K. This is the one exception to the rule that you have to take RMD's at 70 1/2.
My company's Plan requires the Roth contributions to be in the 401K for 5 years before I can roll them over. So they will count towards RMDs until then. I'm not exactly sure of all of the details but its complicated. As I'm fairly close to retirement, I don't have the advantage of many years of growth in a tax-advantaged account. In addition, I'll be in the same tax bracket in retirement as now - full SS, pensions and RMDs so Roth contributions are not really helpful.
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Have the Roth income limits and contribution phase-out region been announced? I couldn't find it in the statement.
Most of my posts assume no behavioral errors.
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
It's in bullet point #5 in the statement. Quote:baw703916 wrote:Have the Roth income limits and contribution phase-out region been announced? I couldn't find it in the statement.
The AGI phase-out range for taxpayers making contributions to a Roth IRA is $183,000 to $193,000 for married couples filing jointly, up from $181,000 to $191,000 in 2014. For singles and heads of household, the income phase-out range is $116,000 to $131,000, up from $114,000 to $129,000. For a married individual filing a separate return, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
It's not just you... since my employer's plan doesn't let us select "max out annual contribution", having a nice, even $1500 a month makes me happy too.mlipps wrote:Is it ok to be excited that it will be a nice round number for contributions each month? The Type A is strong in me...
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Thanks for the tip----the Firearm Blog is quite informative. I'd not seen it before.serbeer wrote:Edit: I added a link since it used to be that it was enough to type in "TFB blog" (The Finance Buff) for it to show up in Google search, but now The Firearm Blog comes out instead
-
- Posts: 1363
- Joined: Wed Mar 12, 2014 8:52 am
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
I don't even bother dreaming about it. Never going to happen for me.kazper wrote:Easier said than done. Maybe one day though. In the meantime, I can dreamToons wrote:Max It Out
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Question: the IRS says that defined contribution plans has a hard limit of $53,000. (the 415 limit) Employee-only part we can only contribute $18,000. So my question is...how the heck can I max out the "real" max of 53000?
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
You need to have an employer that also contributes to your Defined Contribution Plan.ginmqi wrote:Question: the IRS says that defined contribution plans has a hard limit of $53,000. (the 415 limit) Employee-only part we can only contribute $18,000. So my question is...how the heck can I max out the "real" max of 53000?
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
You can only contribute $18,000 pre-tax. Some plans allow for post-tax contributions, but the details are unique to each plan.ginmqi wrote:Question: the IRS says that defined contribution plans has a hard limit of $53,000. (the 415 limit) Employee-only part we can only contribute $18,000. So my question is...how the heck can I max out the "real" max of 53000?
My employers plan allows for the employee to contribute up to 50% of their salary to the 401k, they can choose to put the money in pre-tax or post-tax (or a combination). The amount put in pre-tax is limited to $18,000 , any contributions after that is taxed. So an employee who makes $106,000 a year can contribute 50% of their salary = $53,000 contribution.
The first $18,000 is pretax the remaining $35,000 would be fully taxed before going into the plan, but would max out the $53,000 limit.
The after tax money is accounted for separately in the plan, as you will not have to pay taxes again on the after-tax money when it's withdrawn, but all the earnings will be taxed as ordinary income.
My employer also makes a matching% contribution to the plan, so whatever their contribution is also has to be included when adding up to the total max contribution.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
-
- Posts: 13356
- Joined: Tue Mar 23, 2010 1:45 pm
- Location: Reading, MA
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
It has to do with Mandatory vs Optional contributions as well.busdriver wrote:You need to have an employer that also contributes to your Defined Contribution Plan.ginmqi wrote:Question: the IRS says that defined contribution plans has a hard limit of $53,000. (the 415 limit) Employee-only part we can only contribute $18,000. So my question is...how the heck can I max out the "real" max of 53000?
My former employer had a 403(b) plan (similar but somewhat better than 401(k)).
Under that plan, we were REQUIRED to contribute 5% of gross pay and the employer contributed 10% of gross pay.
Additionally, we had an optional Supplemental plan to which we could contribute this $18,000 amount (lower in previous years).
All of these contribs were pre-tax.
The extent to which max contribs could approach that current $53K limit is/was dependent on one's gross salary...
Attempted new signature...
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Additional insight around the total contribution limit for us older folks with a 401(k) plan......
The total contribution limit for both employee and employer contributions to 401(k) defined contribution plans under section 415(c)(1)(A) increases to $53,000 ($59,000 if age 50 or older).
The total contribution limit for both employee and employer contributions to 401(k) defined contribution plans under section 415(c)(1)(A) increases to $53,000 ($59,000 if age 50 or older).
Last edited by baa_10 on Thu Oct 30, 2014 7:56 pm, edited 1 time in total.
Simplicity is the ultimate sophistication. ~Leonardo DaVinci
- abuss368
- Posts: 27850
- Joined: Mon Aug 03, 2009 2:33 pm
- Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
- Contact:
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
I posted an earlier question above: Does anyone know why IRAs have never had the same contribution limits as 401(k)'s?
John C. Bogle: “Simplicity is the master key to financial success."
-
- Posts: 13356
- Joined: Tue Mar 23, 2010 1:45 pm
- Location: Reading, MA
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Not really, but most likely it had something to do with politicians, so we have to tread lightly...abuss368 wrote:I posted an earlier question above: Does anyone know why IRAs have never had the same contribution limits as 401(k)'s?
Attempted new signature...
- dbCooperAir
- Posts: 1107
- Joined: Tue Jan 07, 2014 9:13 pm
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Don't know why but I really wish they would just set max limit per person that you can send to a 401k/403b/457/IRA/etc. The current system sure could be cleaned up as far as I'm concerned. I feel for the person who makes a decent wage and the company does not offer a tax advantaged plan.abuss368 wrote:I posted an earlier question above: Does anyone know why IRAs have never had the same contribution limits as 401(k)'s?
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. |
-Dwight D. Eisenhower-
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
The higher contribution limits of 401(k) plans is the "carrot" to entice firms to offer them, since those higher limits are primarily of interest to the highest paid employees (which presumably includes the decision makers.) In order to get this benefit they need to offer the plan to all employees and to persuade a certain number to participate, frequently by offering matching contributions.abuss368 wrote:I posted an earlier question above: Does anyone know why IRAs have never had the same contribution limits as 401(k)'s?
Re: IRS Announces new 401(k) contribution max for 2015 ($18,
Yippie, I'll turn 50 next year so I can add the catch-up for the first time.
"Life is what happens to you while you're busy making other plans" - John Lennon. |
|
"You say that money, isn't everything |
But I'd like to see you live without it." - Silverchair