New Tax Laws Change Your Investing Habits In 2015
Posted by: Brookside Admin
Every year, new tax codes impact the way you file for taxes and the way you save for the future. Keeping up with these continuously changing tax laws is a full-time job, which is why it's helpful to talk to the experts at Brown Kinion and Company about both your tax return and your investments and retirement accounts. At Investopedia, there's a helpful list of 2015's changes that specifically impact retirement accounts. Here's how these changes will impact you.
- Employer Plan Contributions
In 2015, tax payers will be able to contribute more to both their 401(k) and 403(b). The contribution limit was $17,500 in most cases in 2014, but that's up to $18-thousand in 2015. Any additional contributions exceeding $18-thousand will be counted in the tax payer's gross income.
- IRA Contributions
Income limits for contributions to IRAs are dependant on each individual's situation. For example, those making traditional IRA contributions while eligible for a workplace retirement plan and with an income between $61-thousand and $71-thousand have had their tax deduction phased out. The same goes for couples in the same situation with a joint income between $98-thousand and $118-thousand. For those without a workplace retirement plan, but whose spouse has one, the tax deduction is phased out when the joint income falls between $183-thousand and $193-thousand.
- Roth IRA Contributions
Income limits for contributing to a Roth IRA are up from 2014. An increase of $2-thousand means individuals with incomes between $116-thousand and $131-thousand and couples with joint incomes between $183-thousand and $193-thousand are eligible. Contributing to both a Roth IRA and a traditional IRA is allowed, but the contribution limit of $5500 for those under 50 years of age applies and is a total of contributions to both accounts.
- IRA Rollovers
Stiff penalties exist for any individual that makes more than one IRA rollover in a single 12-month period. Those penalties could include a 10-percent early withdrawl penalty and a 6-percent excess contributions tax that would be charged each year the rollover remains in the IRA. Income tax could also be due upon the second rollover. For trustee-to-trustee transfers, or conversions from traditional IRAs to Roth IRAs, no such limit exists.
This is a broad overview of some of the critical changes to tax laws in 2015 that will dictate the way you contribute to retirement plans and invest throughout the year. For more information and help with your tax return and tax planning, contact Brown Kinion and Company.