The
maximum amount you can contribute to a traditional IRA or Roth IRA in
2014 remains unchanged at $5,500 (or 100% of your earned income, if
less). The maximum catch-up contribution for those age 50 or older in
2014 is $1,000, also unchanged from 2013. (You can contribute to both a
traditional and Roth IRA in 2014, but your total contributions can't
exceed this annual limit.)
The
income limits for determining the deductibility of traditional IRA
contributions have increased for 2014 (for those covered by employer
retirement plans). For example, you can fully deduct your IRA
contribution if your filing status is single/head of household, and your
income ("modified adjusted gross income," or MAGI) is $60,000 or less
(up from $59,000 in 2013). If you're married and filing a joint return,
you can fully deduct your IRA contribution if your MAGI is $96,000 or
less (up from $95,000 in 2013). If you're not covered by an employer
plan but your spouse is, and you file a joint return, you can fully
deduct your IRA contribution if your MAGI is $181,000 or less (up from
$178,000 in 2013).
If your 2014 federal income tax filing status is: | Your IRA deduction is reduced if your MAGI is between: | Your deduction is eliminated if your MAGI is: |
---|---|---|
Single or head of household | $60,000 and $70,000 | $70,000 or more |
Married filing jointly or qualifying widow(er)* | $96,000 and $116,000 (combined) | $116,000 or more (combined) |
Married filing separately | $0 and $10,000 | $10,000 or more |
*If you're not covered by an
employer plan but your spouse is, your deduction is limited if your MAGI
is $181,000 to $191,000, and eliminated if your MAGI exceeds $191,000.
The
income limits for Roth IRA contributions have also increased. If your
filing status is single/head of household, you can contribute the full
$5,500 to a Roth IRA in 2014 if your MAGI is $114,000 or less (up from
$112,000 in 2013). And if you're married and filing a joint return, you
can make a full contribution if your MAGI is $181,000 or less (up from
$178,000 in 2013). (Again, contributions can't exceed 100% of your
earned income.)
If your 2014 federal income tax filing status is: | Your Roth IRA contribution is reduced if your MAGI is between: | You cannot contribute to a Roth IRA if your MAGI is: |
---|---|---|
Single or head of household | $114,000 and $129,000 | $129,000 or more |
Married filing jointly or qualifying widow(er) | $181,000 and $191,000 (combined) | $191,000 or more (combined) |
Married filing separately | $0 and $10,000 | $10,000 or more |
The
maximum amount you can contribute (your "elective deferrals") to a
401(k) plan in 2014 remains unchanged at $17,500. The limit also applies
to 403(b), 457(b), and SAR-SEP plans, as well as the Federal Thrift
Savings Plan. If you're age 50 or older, you can also make catch-up
contributions of up to $5,500 to these plans in 2014 (unchanged from
2013). (Special catch-up limits apply to certain participants in 403(b)
and 457(b) plans.)
If you
participate in more than one retirement plan, your total elective
deferrals can't exceed the annual limit ($17,500 in 2014 plus any
applicable catch-up contribution). Deferrals to 401(k) plans, 403(b)
plans, SIMPLE plans, and SAR-SEPs are included in this limit, but
deferrals to Section 457(b) plans are not. For example, if you
participate in both a 403(b) plan and a 457(b) plan, you can defer the
full dollar limit to each plan--a total of $35,000 in 2014 (plus any
catch-up contributions).
The
amount you can contribute to a SIMPLE IRA or SIMPLE 401(k) plan in 2014
is $12,000, unchanged from 2013. The catch-up limit for those age 50 or
older also remains unchanged at $2,500.
Plan type: | Annual dollar limit: | Catch-up limit: |
---|---|---|
401(k), 403(b), governmental 457(b), SAR-SEP, Federal Thrift Savings Plan | $17,500 | $5,500 |
SIMPLE plans | $12,000 | $2,500 |
Note: Contributions can't exceed 100% of your income.
The
maximum amount that can be allocated to your account in a defined
contribution plan (for example, a 401(k) plan or profit-sharing plan) in
2014 is $52,000 (up from $51,000 in 2013), plus age-50 catch-up
contributions. (This includes both your contributions and your
employer's contributions. Special rules apply if your employer sponsors
more than one retirement plan.)
Finally,
the maximum amount of compensation that can be taken into account in
determining benefits for most plans in 2014 has increased to $260,000,
up from $255,000 in 2013; and the dollar threshold for determining
highly compensated employees remains unchanged at $115,000.
Source: Sean Henderson, Financial Advisor - Waddell & Reed 210-826-0685 ext: 140
This
information is prepared by an independent third party, Broadridge
Investor Communication Solutions, Inc. and is provided for informational
and educational purposes only. Waddell & Reed believes the
information has been obtained from sources considered to be reliable,
but does not guarantee the accuracy of the information provided. This
information is not meant to be a complete summary or statement of all
available data necessary for making financial or investment decisions
and does not constitute a recommendation.Please note that the information provided may include references to concepts that have legal, accounting and tax implications. It is not to be construed as legal, accounting or tax advice, and is provided as general information to you to assist in understanding the issues discussed. Neither Waddell & Reed, Inc., nor its Financial Advisors give tax, legal, or accounting advice.
This information is not meant as financial or investment advice pertaining to your personal situation. The selection of appropriate investment, insurance or planning options and/or strategies should be made on an individual basis after consultation with appropriate legal, tax and financial advisors. Nothing contained herein is intended as a solicitation or an offer to buy or sell any product or service mentioned and they may not be suitable for all investors.
Securities offered through Waddell & Reed, Inc., Member FINRA/SIPC, are not insured by FDIC, NCUA or any other government agency, are not deposits or obligations of the financial institution, are not guaranteed by the financial institution, and are subject to risks, including the possible loss of principal. Insurance products are offered through insurance companies with which Waddell & Reed has sales arrangements. Guarantees provided by insurance products are subject to the claims-paying-ability of the issuing insurance company.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2013.