2015 Tax Law Changes
Tax laws and regulations change from year-to-year. Learning what new tax laws have been created or what former ones have been revised is important for accurate tax returns. Here are five changes to tax regulations for 2015:
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- IRA Limitation Rollovers
In 2015, the maximum contribution that taxpayers will be able to make to a 401(k), 403(b) and 457 plan, as well as to the federal government’s Thrift Savings Plan, is $18,000. There’ll also be an increase of $6,000 on catch-up contributions for employees age 50 and older. Therefore, the limit will be capped at $24,000 for workers 50 and above.
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- Roth IRA Contributions Higher Income Limits
There’ll be an increase in how much you can contribute to your Roth IRA in 2015. It will be increased by $2,000 and will affect those with incomes of $116,000 or more but less than $131,000 for individuals ($183,000 or more but less than $193,000 for married partners). If you have both a traditional and a Roth IRA, the maximum contribution that you can make for both accounts is capped at $5,500 (or $6,500 if you’re 50 or older).
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- IRA Contributors’ Higher Limits
The maximum contribution for an IRA in 2015 for taxpayers under the age of 50 stays at $5,500. If you’re 50 and older, though, you can make an additional catch-up contribution of $1,000 for a total of $6,500. For people who aren’t employed and are on their spouse’s retirement plan, the tax deduction for their IRA contribution will not apply if they are listed as having a joint income of more than $183,000 but less than $193,000 in 2015.
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- Higher Employer Plan Contribution Limits
The new tax law will restrict you to only one IRA-to-IRA rollover within the year. It’ll also affect the limits on your contribution to the retirement plan you have through your employer. A second one would incur income tax on the rollover, an excess-contributions tax of 6% per year, and a 10% penalty for withdrawing early for as long as that rollover shows up in your IRA. This limits how you distribute all or part of your account to move it into a new IRA. There haven’t been any limitation changes made to trustee-to-trustee transfers between IRAs. There are also no limits on how many conversions you may make from traditional IRAs to Roth IRAs.
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- Health Expense Accounts
In 2015, changes are planned for how and when you can use your health flexible spending account, or FSA. Before, if you hadn’t used $500 of your FSA, you were able to roll that amount over to be used in the next plan year without restrictions. Now, if you contribute to your FSA in the year 2015, and at the end of 2014 you have a balance in your account and wish to carry over $500 of that balance into 2015, you’ll be considered ineligible to participate in a health expense account. This is a restriction that will be imposed in 2015, but that does not include FSAs that are used specifically for dental or dependent care.
Make sure you understand the restrictions and regulations regarding all of these changes to the tax laws for 2015, before making any financial moves.
