What are the IRA and 401k Changes For 2015?
The other day, I was looking through my retirement planning to assess how I would like to adjust my contributions for 2015. In doing so, I came across a bunch of changes that will be coming to both the IRA and 401k programs in 2015. These products alone can be confusing for the novice saver so I decided to help by detailing the changes in as simple a manner as possible. Below are the changes in short form.
- Under 50 years old: The maximum contribution will change to $18,000. It was previously $17,500.
- 50 years old and older: The maximum contribution will change to $24,000. It was previously $23,000. The increase comes from a $500 increase in the catch-up contribution in addition to the $500 increase in the base contribution.
- As for the IRA/Roth IRA, there are no changes here. The maximum contribution remains at $5,500 and an additional $1,000 in catch up contributions for the 50 year old and older.
- For 2015, there will be a new player on the field. This product is called the myRA. This is pretty much a Roth IRA product targeting the lower to middle income earners. This is an employer sponsored program where the individual can contribute as little as $5 per check. The account grows tax free and there are no fees. Additionally, you can’t lose your principle. Yes, you did not read that wrong. You cannot lose your principle. This is because the contributions are invested in Treasury securities backed by the United States.
- Income limits here are $129,000 for individuals and $191,000 for couples. There is a maximum of $5,500 a year with a $1,000 catch up contribution. The caveat here is that once your account reaches $15,000, you are then required to roll it over to a Roth IRA.
In my opinion, the myRA is an OK place to start however with the low risk, low reward factor, it makes it very unattractive for anyone with even a little bit of risk tolerance. Either way, once the individual reaches $15,000, they will need to roll it over anyways. Save the hassle and just start the right way. But of course, everyone’s situation is different.
If you are looking to open an IRA with very low fees and more of a set and forget, low maintenance structure, I highly recommend using Betterment. They are perfect for those looking for an automated investment portfolio and offer IRA accounts as well.