As exciting as the new tax table was for me, the retirement limit announcement produced a hollow thud.
You see, for 2014, the 401(k), 403(b), 457, and Government TSP are all unchanged at $17,500 limit, with a $5,500 catch-up provision for those 50 and older.
The IRA limit is also unchanged at $5,500 with a $1,000 catch-up for 50 and older. The phaseout for IRA deductibility for a single filer covered by a workplace retirement plan is between $60,000 and $70,000, and for married filing joint, between $181,000 and $191,000. The AGI phase-out range for taxpayers making contributions to a Roth IRA is $181,000 to $191,000 for married couples filing jointly.
For those in that phaseout range, these numbers are important. Above or below them, and you’re not impacted at all.
This lack of an increase comes thanks to a low CPI inflation rate, which is either good, or if you are a conspiracy theorist, is purposely understated to keep Government programs COLAs from increasing too much. Either way, the numbers are out.
Joe, thanks for posting this, I sure wish they would increase the IRA limits to $10,000 or more. Other than tax reasons, why do they keep it so low?
Great question, Jim. The laws for 401(k) and IRAs were written separately, and never were consolidated. I often drive by Walden Pond, and hear a little voice saying “simplify, simplify.”
In my opinion, the phase-outs should be eliminated, and there should be one limit across the board. End the year with only $5K in your 401(k)? Top off the IRA with $15K! Won’t happen, just my desire.