taxes

Money Matters: 2014 Taxes & 2015 Limits

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taxes

Cary, NC — The New Year is upon us and, with it, a few new Federal contribution limits on the various qualified retirement plans. This is a quick overview of the 2015 numbers along with a reminder on what you can still do for the 2014 tax year.

Before You File Your 2014 Taxes

If you have not yet done so, you still can contribute $5,500 into a traditional or Roth IRA. The amount is $6,500 if age 50 or over. This can be in addition to any amount you have contributed to a retirement plan at work.

Also, your spouse can contribute up to the same amounts to their own IRA, whether or not they work outside the home. Certain income limits come into play for Roth IRA contributions as well as claiming a deduction for traditional IRA contributions, so please feel free to call me with questions. For self-employed persons with a SEP-IRA, the contribution limits are much higher. Please call for details, as well as the “Individual 401(k)” program which may benefit you in 2015.

2015 Limits

  • Traditional IRA and Roth IRA—Limit remains at $5,500 (and $6,500 if age 50 or over).
  • SEP-IRA and Individual 401(k)—Contribution limits rise slightly. Please call for details.
  • SIMPLE-IRA—Limit rises to $12,500, and is $15,000 for age 50 or over.
  • Employer-sponsored 401(k) or 403(b) Retirement Plans—The limit of your contribution rises to $18,000 (and $24,000 if age 50 or over). Any matching that your employer provides would be over and above these limits.

Summary

There are still contributions you can make into some retirement plans for 2014 prior to filing your taxes. If your cash flow allows, you could even make the 2014 and 2015 IRA contributions at the same time in order to help maximize the growth potential for the coming year. However, a systematic investment program may better fit your budgeting.

This is not tax or legal advice, and you may wish to consult with your tax or legal advisors on these issues.

Contact Raj

For more information about this and other financial topics, contact me at 919-610-2712 or satsangi.raj@principal.com.

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Contributed by Raj Satsangi, a Financial Representative of Principal National Life Insurance Company and Principal Life Insurance Company and a Registered Representative of Princor Financial Services Corporation. Photo by Ken Teegardin.