Jim Blankenship for USA Today writes: Your pay not only determines the size of your nest egg when you retire but also restricts how much you save annually without penalty. Depending on your income, you can't just sock away whatever you want wherever you want for retirement.
Here are your limits for 2015, based on how you file your tax return.
Income limits determining your maximum contribution to retirement savings depend on whether you file your federal income tax return in the status category of single, married filing jointly (MFJ), married filing separately (MFS), as a head of a household (HH) or as a qualifying widow or widower.
The higher your 2015 modified adjusted gross income (MAGI), generally the more the deductible amount of your contribution to an individual retirement plan drops, possibly to where you can't contribute at all.
Income limits if you file taxes using the single or head of household (HH) status
Traditional IRA. If you are not covered by a retirement plan at your job or you are covered by such a workplace plan and your MAGI is $61,000 or less, you have no limit to your deductible contributions.
If you are covered at your job and your MAGI falls between $61,000 and $71,000, you receive a partial deduction that is reduced by 55 cents for every dollar over the $61,000 lower limit (65% if you're older than 50).
As in all scenarios discussed here, the above adjusted amount is rounded up to the nearest $10; if it's less than $200, you can contribute at least $200.
If your workplace plan covers you and your MAGI exceeds $71,000, you can't deduct contributions to a traditional IRA. You are eligible to make non-deductible contributions up the annual limit for the account, of course, and those contributions grow tax-free.
Roth IRA. If your MAGI comes in under $116,000, you qualify to contribute the entire amount to a Roth IRA. If your MAGI is between $116,000 and $131,000, your contribution deduction shrinks pro rata for every dollar above the lower end of that range. If your MAGI tops $131,000, you cannot contribute to a Roth IRA.
Income limits if you file taxes using the married filing jointly (MFJ) or as a qualifying widow or widower
Traditional IRA. Filing in the MFJ or qualifying widow or widower categories slightly complicates deductions for contributing to a traditional IRA.
If you are not covered by a retirement plan at your job and your spouse is also not covered with a plan, you have no MAGI limit on your deductible contributions to a traditional IRA, nor do you face a limit if your MAGI is $98,000 or less.
If covered under a retirement plan at your job and you earned a 2014 MAGI between $98,000 and $118,000, you can take a partial deduction that drops 27.5% for every dollar over the lower threshold (32.5% if you're older than 50).
If you are covered at your job and your MAGI exceeds $118,000, you cannot deduct any of your traditional IRA contributions for this tax year, though again you can make non-deductible contributions up the annual limit.
Spousal coverage in workplace plans figures in here. For instance, if your workplace plan doesn't cover you but your spouse is covered at his or her job and your MAGI is less than $183,000, you can deduct the full amount of your IRA contributions. If your MAGI is greater than $183,000 but less than $193,000 in these circumstances, you are entitled to a deduction that's reduced 55% for every dollar over the lower limit (65% if over 50).
If your MAGI is greater than $193,000, you can't deduct any of your traditional IRA contributions.
Roth IRA. If you file your return in the categories of married filing jointly (MFJ) or as a qualifying widow or widower, you need an annual MAGI of less than $183,000 to become eligible to contribute the entire amount to a Roth IRA.
If your MAGI is $183,000 to $193,000, your contribution to a Roth IRA falls ratably for every dollar above the lower end of the tax bracket range, in this case $183,000.
If your MAGI exceeds $193,000, you cannot contribute to a Roth IRA.
Income limits if you file taxes using the married filing separately (MFS)
Note: For purposes of the MAGI qualification amount discussion here only, if you file MFS but did not live with your spouse during the tax year, you come under the contribution and deduction restrictions as if you file taxes in what the Internal Revenue Service recognizes as the single status category.
A traditional IRA. If neither you nor your spouse has a retirement plan available on the job, you have no MAGI limit on your deductible contributions.
If you do have such a plan and your MAGI comes in at less than $10,000, you receive a deduction that's reduced 55 cents for every dollar (65 cents if you are older than 50) above the lowest dollar threshold for your tax bracket. The same formula holds true if you are not covered by a plan but your spouse is.
If the employer of you or your spouse offers a plan and your MAGI tops $10,000, you can deduct none of your contributions to a traditional IRA. You can still make non-deductible contributions up the annual limit, and those contributions grow tax-free.
Roth IRA. If your MAGI is less than $10,000, your contribution to a Roth IRA drops pro rata for every dollar over the lower limit of your tax bracket. You cannot contribute to a Roth IRA if your MAGI exceeds $10,000.
Jim Blankenship, CFP, is a fee-only financial planner at Blakenship Financial Planning in New Berlin, Ill.,
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