2014 News Update – Independent Broker Dealers Can Take Advantage of Slight COLA Increases
Now that the IRS has revealed its cost-of-living adjustments to limitations for retirement plan contributions for the 2015 tax year, are you advising clients to accelerate pre-tax contributions to qualified retirement accounts? Independent broker dealers – or a financial advisor working for a broker dealer – can take advantage of slight COLA Increases – is this part of your regular plan for your clients?
The actual announcement was made long before Thanksgiving, but other news, holidays, Black Friday and Cyber Monday kept my eyes off it until Investment News ran an article a few days ago.
Most of the adjustments are relatively small, amounting to less than $1,000. But over time we know that those increases can have a larger effect – depending on how good the investments are backing those retirement plans.
A few of the changes that caught my eye for individuals and couples who likely already are putting money into retirement plans follow. I’ve edited this list to just a few items for brevity. Visit the IRS website for details.
Deduction for taxpayers making contributions to a traditional IRA
- Phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $61,000 and $71,000, up from $60,000 and $70,000 in 2014.
- For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $98,000 to $118,000, up from $96,000 to $116,000.
AGI phase-out range for taxpayers making contributions to a Roth IRA
- $183,000 to $193,000 for married couples filing jointly, up from $181,000 to $191,000 in 2014.
- $116,000 to $131,000 for singles and heads of household, up from $114,000 to $129,000.
$1,050,000 to $1,070,000 – The increase in the dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5year distribution period. The dollar amount used to determine the lengthening of the 5year distribution period remains unchanged at $210,000.
$1,084,000 to $1,101,000 – Increase in the dollar amount under Section 430(c)(7)(D)(i)(II) used to determine excess employee compensation with respect to a single-employer defined benefit pension plan for which the special election under Section 430(c)(2)(D).
These COLA adjustments are incremental, but they do provide an opportunity to accelerate pre-tax contributions to a client’s qualified retirement accounts. Do your clients expect you to provide this information to them?