In our last post, we provided an overview of important 2015 amounts related to individual income taxes, the alternative minimum tax, education- and child-related tax. In this post we cover retirement plans and estate and gift taxes.

Many retirement plan limits increase slightly in 2015; thus, you may have opportunities to increase your retirement savings:


Type of Plan

2014 limit

2015 limit

Elective deferrals to 401(k), 403(b), 457(b)(2) and 457(c)(1) plans

$17,500

$18,000

Annual benefit for defined benefit plans

$210,000

$210,000

Contributions to defined contribution plans

$52,000

$53,000

Contributions to SIMPLEs

$12,000

$12,500

Contributions to IRAs

$5,500

$5,500

Catch-up contributions to 401(k), 403(b), 457(b)(2) and 457(c)(1) plans

$5,500

$6,000

Catch-up contributions to SIMPLEs

$2,500

$3,000

Catch-up contributions to IRAs

$1,000

$1,000

Compensation for benefit purposes for qualified plans and SEPs

$260,000

$265,000

Minimum compensation for SEP coverage

$550

$600

Highly compensated employee threshold

$115,000

$120,000

Your MAGI may reduce or even eliminate your ability to take advantage of IRAs. Fortunately, IRA-related MAGI phase-out range limits all increase for 2015.

Traditional IRAs. MAGI phase-out ranges apply to the deductibility of contributions if the taxpayer (or his or her spouse) participates in an employer-sponsored retirement plan:

  • For married taxpayers filing jointly, the phase-out range is specific to each spouse based on whether he or she is a participant in an employer-sponsored plan:
    • For a spouse who participates, the 2015 phase-out range is $98,000–$118,000.
    • For a spouse who does not participate, the 2015 phase-out range is $183,000–$193,000.
  • For single and head-of-household taxpayers participating in an employer-sponsored plan, the 2015 phase-out range is $61,000–$71,000.

Taxpayers with MAGIs within the applicable range can deduct a partial contribution; those with MAGIs exceeding the applicable range cannot deduct an IRA contribution.

A taxpayer whose deduction is reduced or eliminated can make nondeductible traditional IRA contributions. The $5,500 contribution limit (plus $1,000 catch-up if applicable and reduced by any Roth IRA contributions) still applies. Nondeductible traditional IRA contributions may be beneficial if your MAGI is too high for you to contribute (or fully contribute) to a Roth IRA.

Roth IRAs. Whether you participate in an employer-sponsored plan does not affect your ability to contribute to a Roth IRA, but MAGI limits may reduce or eliminate your ability to contribute.

  • For married taxpayers filing jointly, the 2015 phase-out range is $183,000–$193,000.
  • For single and head-of-household taxpayers, the 2015 phase-out range is $116,000–$131,000.

You can make a partial contribution if your MAGI is within the applicable range, but no contribution if it exceeds the top of the range.

Note: Married taxpayers filing separately are subject to much lower phase-out ranges for both traditional and Roth IRAs.

Gift and Estate Taxes

The unified gift and estate tax exemption and the generation-skipping transfer (GST) tax exemption are both adjusted annually for inflation. For 2015 the amount is $5.43 million (up from $5.34 million for 2014).

The annual gift tax exclusion remains at $14,000 for 2015. It is adjusted only in $1,000 increments, so it typically increases only every few years. It increased to $14,000 in 2013, so it may go up again for 2016.

Is tax Relief on Your Horizon?

With the 2015 cost-of-living adjustment amounts trending slightly higher, there may be an opportunity to realize some tax relief next year. In addition, with many retirement-plan-related limits also increasing, you may have the chance to boost your retirement savings. If you have questions on the best tax-saving strategies to implement based on the 2015 numbers.