What is the Max IRA Contribution for 2015?

saving for retirementIndividual retirement accounts are a critical savings solution for Americans. According to a Fox Business Report, contributions to retirement accounts reached record levels this year. In the first quarter of 2015, the average balance stood at $94,100.

Max IRA Contribution 2015

The IRS has set contribution limits for different types of retirement accounts. This amount can stay the same or change from year to year. For 2015, the max IRA contribution to a traditional and # IRA is $5,500. A catch-up contribution of $1,000 is applicable to individuals aged 50 years and above.

If you have a simplified pension plan (SEP), then your maximum contribution is capped at 25 percent of your compensation. The maximum compensation considered in this case is $265,000, and the maximum contribution amount is $53,000. For a Savings Incentive Match Plan for Employees (SIMPLE) IRA, the contribution limit is $12,500 while the catch up limit is $15,500.

Phase Out Eligibility

The max IRA contribution is based on modified adjusted gross income (AGI) requirements.

If you are filing as a single individual or the head of a household or filing separately as a married individual and not living with your spouse during the year, then the following max IRA contributions will apply:

  • Up to the limit if your modified AGI is less than $116,000
  • A reduced amount if your modified AGI is equal to or greater than $116,000 but less than $131,000
  • Zero (no contribution) for a modified AGI of $131,000 or more

If you are filing jointly as a married individual, you can contribute:

  • Up to the limit for a modified AGI of less than $183,000
  • A reduced amount for a modified AGI of $183,000 or more but less than $193,000
  • Zero (no contribution) for a modified AGI of $193,000 or more

If you are filing separately as a married individual and living with your spouse during the year, your max IRA contributions can be:

  • A reduced amount for a modified AGI of less than $1,000
  • Zero (no contribution) for a modified AGI equaling or more than $1,000

When Do Tax Deductions Occur?

There are no immediate tax benefits with a Roth IRA. But all funds within the account grow tax-free. Also, there is no minimum distribution requirement, which means you can let your money grow on a tax-deferred basis without taking distributions (making withdrawals). You can make contributions to your traditional IRA as late as the annual deadline for filing tax returns, and still use this to cut your previous year’s tax bill. However, the capital gains earned by your account over its lifetime can be fully taxed when you start taking distributions between the ages of 59 ½ and 70 ½.

As the max IRA contribution limits may change from one year to the next, it is best to stay updated with the
new rules from the IRA website.

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