The IRS has recently released new guidelines for choosing the type of retirement plan
contributions employees can make to their employer-sponsored retirement plans. These tips are available for the purpose of providing clear, transparent information to employees about plans, whether they are thinking about setting one up or if they are currently part of a plan through their workplace.
In addition, Leading Retirement Solutions now has a 2015 Plan Contributions section on the company website, which serves as a one-stop destination for answering important questions about retirement plans and maximum contributions.
Below are examples that your plan may allow you to make:
• Pre-tax elective deferrals — You don’t include these amounts in your
gross income in the year that you make the contributions. For example, if
you direct your employer to contribute $2,000 from your $30,000 salary in
2015, you only include $28,000 in income. You have to include these
contributions, plus any earnings, in your income when you withdraw them
from the plan.
• Designated Roth contributions — These are elective deferrals that are
included in your gross income in the year you make the contributions, but
not when you withdraw them from the plan. Also, if you meet certain
conditions, you don’t have to include any earnings on these contributions
in your income when you withdraw them from the plan.
• After-tax employee contributions — These amounts are also included
in your gross income in the year you make the contributions. Although you
don’t have to include these contributions in income when you withdraw
them from the plan, you do have to include any earnings. Unlike elective
deferrals, there is no annual dollar limit on the amount of these
contributions you can make, but if you are a highly compensated
employee, your after-tax employee contributions may be limited by what
other employees contribute.
• Catch-up contributions — These are additional elective deferrals that
you may be able to contribute to the plan if you are age 50 or older by the
end of the calendar year. You can make these contributions as pre-tax
elective deferrals or designated Roth contributions, or any combination of
2015 elective deferral limits:
• $18,000 to 401(k) (other than a SIMPLE 401(k)), 403(b) and 457(b) plans,
plus $6,000 catch-up contributions
• $12,500 to SIMPLE plans, plus $3,000 catch-up contributions
Ask your employer or check your plan documents to find out what types of
contributions you can make to your employer’s retirement plan.
Want more? The links below provide additional retirement information on IRS.gov.
- Types of Retirement Plans – explains different types of retirement plans,
including the amount and types of contributions that you can make to the
- Tax Information for Retirement Plans – Resources for Individuals – lists the
benefits of participating in a retirement plan, how to join and contribute to the
plan, and tax on amounts you receive from the plan.
- Retirement Saving Tips for Individuals – contains information on how to save for retirement and understand your employer’s plan.
- Retirement Plans Frequently Asked Questions – answers common questions on a variety of retirement plan topics.
Questions or Comments? Contact Leading Retirement Solutions at http://www.leadingretirement.com or by phone at (800) 974-2814 (toll free).