Posting by Sean Urbany

Earlier this week, both the Internal Revenue Service and the Social Security Administration announced cost-of-living adjustments impacting the 2015 tax year.

First, the IRS the announced a number of cost-of-living adjustments related to retirement items. Below are some of the main points announced by the IRS:

• Taxpayers who participate in 401(k) plans, 403(b) plans, 457 plans, or the Federal government’s Thrift Savings Plan, may now choose to make annual elective deferrals of up to $18,000 in 2015. The annual catch-up contribution limit for taxpayers aged 50 years or over has also increased to $6,000.
• The 2015 limit for annual contributions to Individual Retirement Arrangement (IRA) remains unchanged at $5,500. The annual catch-up contribution for taxpayers aged 50 years or over also remains the same at $1,000.
• For defined contribution plans, the maximum contribution for 2015 has increased to $53,000 while the annual compensation limit has increased to $265,000.

For additional details on the IRS’s cost-of-living adjustments, including the adjusted phase-out thresholds for deductible IRA contributions, please visit the IRS press release.

Secondly, the Social Security Administration announced the following cost-of-living adjustments for 2015:

• Taxpayers who receive monthly Social Security and Supplemental Security Income benefits will see an increase in their monthly benefits of 1.7% for 2015.
• The maximum wages subject to Social Security tax will increase to $118,500 for 2015.

For additional details on the SSA’s cost-of living adjustments, please visit the Social Security Administration press release.

If you have any questions on how these changes may impact your 2015 tax outlook, please contact us or consult with your tax advisor.