The Internal Revenue Service today announced that the 2014 contribution limits for 401(k) plans and individual retirement accounts (IRAs) will be unchanged from this year’s levels. The IRS explained that inflation, as measured by the Consumer Price Index, hadn’t risen enough over the past year to justify raising the caps.
Therefore, for 2014, the maximum that an employee can contribute to a 401(k), 403(b) or 457 plan will remain $17,500, with employees aged 50 and over eligible to contribute an additional $5,500. Caps on tax-deferred IRA contributions will remain at $5,500, with a 50-plus catch-up limit of an additional $1,000.
There were some small increases in the annual income thresholds above which individuals and couples can no longer qualify for tax deductions for IRA and Roth IRA tax deductions for the so-called saver’s credit for low- and middle-income workers. Here are the details, quoted from the IRS news release:
The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $60,000 and $70,000, up from $59,000 and $69,000 in 2013. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $96,000 to $116,000, up from $95,000 to $115,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $181,000 and $191,000, up from $178,000 and $188,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
The AGI phase-out range for taxpayers making contributions to a Roth IRA is $181,000 to $191,000 for married couples filing jointly, up from $178,000 to $188,000 in 2013. For singles and heads of household, the income phase-out range is $114,000 to $129,000, up from $112,000 to $127,000. For a married individual filing a separate return, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $60,000 for married couples filing jointly, up from $59,000 in 2013; $45,000 for heads of household, up from $44,250; and $30,000 for married individuals filing separately and for singles, up from $29,500.