The cost of living adjustment recently announced for 2016 affects many retirement plan contribution limits and many social security limits. To assist you in planning, we are listing both the 2015 and the 2016 amounts for some of the most common items.
The Traditional and Roth IRA annual contribution limit for 2015 is $5,500 and for 2016 remains at $5,500. The catch up contribution limit for individuals age 50 and over to Traditional and Roth IRAs for 2015 is $1,000 and for 2016 is $1,000.
The 401(k) & 403(b) elective deferral contribution limit for 2015 and 2016 is $18,000. The catch up contribution limit for employees age 50 and over to 401(k) and 403(b) for 2015 and 2016 is $6,000.
Other important figures were announced that are tied to cost of living adjustments. These include the maximum taxable earnings subject to social security. For 2015, this is $118,500 and for 2016, it remains unchanged at $118,500. The annual retirement earnings exemption test for earnings prior to full retirement age is $15,720 for 2015 and $15,720 for 2016.
If we haven’t included a contribution limit that you need or you have questions about something we have listed, please call our office. We would be happy to find an answer to your question.
Treasury Circular 230 Disclosure
Unless expressly stated otherwise, any federal tax advice contained in this communication is not intended or written to be used, and cannot be used or relied upon, for the purpose of avoiding penalties under the Internal Revenue Code, or for promoting, marketing, or recommending any transaction or matter addressed herein.