October 31, 2014

401(k) Contribution Limits Go Up for 2015, and Introducing the myRA

The IRS has announced the new contribution limits for 2015. While IRA contribution limits will remain the same, 401(k) contribution limits have increased. The new contribution limits for 2015 are as follows:

2014 Limits New 2015 Limits
401(k), 403(b), and 457 plans $17,500 $18,000
Age 50+ catch-up contribution $5,500 $6,000
Traditional and Roth IRAs $5,500 $5,500
Age 50+ catch-up contribution $1,000 $1,000

 

Along with increases to 401(k) contribution limits in 2015, the government is rolling out in late 2014 a whole new way to save for retirement: the myRA, intended to provide retirement saving options for those who may not be covered under an employer’s plan. Workers who meet income limits (annual income lower than $129,000 for individuals, $191,000 for couples) can contribute to a myRA via payroll deduction, starting with an initial deposit as low as $25. The account is a Roth account; qualified withdrawals are tax-free.

One of the most significant features of the myRA is the government guarantee with which it comes. A myRA account will hold a new retirement savings bond backed by the U.S. Treasury. These bonds are guaranteed to never lose value, will earn interest at the same variable rate as government securities, and participants will be charged no fees. Once a saver’s myRA reaches $15,000 or after 30 years, the balance will be transferred to a private-sector retirement account.