2014 IRS Limits – Saving For Retirement

2014 IRS Limits

It’s 2014, and the new IRS limits have kicked in.  Here’s what you need to know concerning your 401k, IRA and other limits.

The annual exclusion from gift tax is still $14,000 per gift recipient.  The gift recipient can be any individual, not just family.  And you can make gifts to an unlimited number of people.  You are just limited to $14,000 for each one in order to avoid gift taxes.

The foreign earned income exclusion is now $99,200.  This means that you can shelter up to $99,200 of income earned while working in another country from US taxable income.

The maximum wage used to calculate Social Security tax is now $117,000.

401(k) Plans

The employee contribution limit remains at $17,500 for 2014.  The catch-up provision for those age 50 and older also remains the same at $5,500.  Which means an employee aged 55 can shelter up to $23,000 in his/her 401(k).

The above limits do not include company matching money.  However, there is a limit as to the total amount of money – both employee contributions and employer contributions – that can be contributed to a 401(k).  It is known as the 415 limit, and for 2014 that limit is $52,000.  The 415 limit does not include the $5,500 catch-up.

Traditional and Roth IRAs

The contribution limits for IRAs remains at $5,500.  The catch-up provision limit remains at $1,000.

Contributions to traditional and Roth IRAs are subject to income phase out ranges. Income phase out ranges have been increased for both traditional and Roth IRAs.

For traditional IRAs, the income phase out range for deducting IRA contributions is now $60,000 to $70,000 modified adjusted gross income (AGI) for single taxpayers, and $96,000 to $116,000 for joint filers for the spouse covered by an employer plan.  For the spouse not covered by an employer plan, the range is from $181,000 to $191,000.  Above those top limits you will not be able to deduct contributions from your taxable income.

For Roth IRAs, the income phase out ranges for contributions is now $114,000 to $129,000 for single taxpayers and $181,000 to $191,000 for joint filers.  Above those top limits you will not be able to contribute to a Roth.

For married filing separately for both traditional and Roth IRAs, the phase out range is $0 to $10,000.

Long Term Care Premiums

You are able to take a deduction for premiums paid for long-term care insurance, subject to certain limits.  These limits are defined by age.  For those 40 and younger, that limit is $370.  For those from ages 41 to 50, the limit is $700.  For those between 51 and 60, the limit is $1400.  Between 61 and 70, it’s $3720.  For those over age 70, the limit is $4660.

A chart is included below for ease of reference:

Limit Category                                                                  2013 Limit

Annual gift exclusion                                                         $14,000

Foreign earned income exclusion                                    $99,200

Wages subject to Social Security tax                                $117,000

401(k) Limits

Employee contributions                                                    $17,500

Catch-up (age 50 and over)                                             $5,500

Defined Contribution Plan limit                                       $52,000

IRA Limits

Contributions                                                                     $5,500

Catch-up                                                                             $1,000

Roth IRA Income Phase Out Range                               Modified AGI Range

Single taxpayer                                                                  $114,000 to $129,000

Joint filers                                                                           $181,000 to $191,000

Married filing separately                                                  $0 to $10,000

For Deducting Contributions to Traditional IRAs    Modified AGI Range

Single taxpayer                                                                  $60,000 to $70,000

Joint filers                                                                           $96,000 to $116,000

One spouse not covered by employer plan                    $181,000 to $191,000

Married filing separately                                                  $0 to $10,000

Deduction Limit for Long-term Care Premiums

Age 40 or under                                                                 $370

41-50                                                                                  $700

51-60                                                                                  $1400

61-70                                                                                  $3,720

Over 70                                                                               $4,660