Monday, July 13, 2020

IRS Ups Retirement Contribution Levels

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Due to cost-of-living adjustments, the IRS made a welcome announcement that, starting in 2015, it will allow people to add a little more to their retirement plans. Employees with 401(k) plans may now contribute up to $18,000 -- an increase of $500. This increase also applies to people who have 403(b) plans, most 457 plans and participants in the federal government's Thrift Savings Plan. Catch-up levels also increased from $5,500 to $6,000 for people who are age 50 and over if they're participating in these same plans.

By allowing people to save more money, the IRS has essentially boosted the retirement system for everyone. For those who already have a plan, these increased limits may provide a little more peace of mind that they will be able to save enough for retirement or allow them to catch up faster if they've been lagging in their contributions. For people currently in the workforce who haven't started a retirement account yet, these increased limits might just be the necessary incentive to motivate them to build assets and accumulate wealth.

But those aren't the only changes! There were an extensive number of contribution and compensation adjustments in the IRS announcement. Each change is clearly stated in bullet point form and can be viewed on the IRS website.


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