« Articles « « Get Ready for Financial Changes in 2015
When the clock strikes midnight on New Year's Eve, it also ushers in a new year of financial rules and regulations—giving you new opportunities to set yourself up for financial success.
Gear up ahead of time:
If you're saving for retirement
- Changes to contribution limits. According to the IRS, the maximum amount you can contribute to an employer-sponsored plan such as a 401(k), 403(b), 457 or Thrift Savings Plan (TSP) in 2015 increases $500 from $17,500 to $18,000. The catch-up contribution amount on these types of retirement savings accounts for individuals ages 50+ increases from $5,500 to $6,000. Strive to increase contributions to your employer-sponsored retirement plan and take advantage of maximum contribution limits if you can.
- More people eligible for saver's credit. To encourage retirement savings, there's a federal tax credit for low- to moderate-income workers who contribute to a 401(k), 403(b), 457, TSP or individual retirement account (IRA). If you're eligible, you could get a tax credit for up to $1,000 (single filers) or $2,000 (married filing jointly). The income limits for eligibility increase to $30,500 for singles, $45,750 for heads of household and $61,000 for married couples in 2015. A tax credit can increase your refund or reduce the amount of tax you owe. Learn more about the saver's credit here.
- New limitation on IRA rollovers. Starting in 2015, you may make only one rollover from one IRA to another IRA in any 12-month period, regardless of how many IRAs you have.* In the past, you could roll over any number of different IRAs once during a 12-month period and avoid taxes or penalties as long as you rolled the balances over into a new IRA within 60 days. The good news? The new rule, designed to prevent individuals from taking essentially free loans from multiple IRAs during the 60-day rollover period, doesn't affect trustee-to-trustee transfers. For example, you could transfer any number of IRAs you own through other financial institutions directly to a Navy Federal IRA (since a check isn't made payable to you first). There's also no restriction on converting Traditional IRAs to Roth IRAs. Consider consolidating multiple IRAs into one for easier recordkeeping and talk to a tax advisor about whether a Roth conversion makes sense for you.
- No change to IRA limits. The annual contribution limit to Roth and Traditional IRAs remains at $5,500. The catch-up amount, which isn't indexed to inflation, is also unchanged at $1,000.
If you're headed to college
The 2014-2015 Free Application for Federal Student Aid (FAFSA) now collects income information from a dependent student's legal parents even if the parents are unmarried or of the same gender, as long as the parents live together. In the past, information was included only if the parents were legally married and of different genders. This change could have an impact on financial aid packages.
When you're tax planning
The IRS announced inflation-adjusted limits, including an increase to the personal exemption (the amount you can exclude from income for yourself and each of your dependents—now $4,000, up from $3,950 in 2014), tax brackets and the standard deduction (the deduction you take if you don't itemize deductions). Talk with your tax advisor, who can help you determine how these changes will affect your 2015 tax bill.
We'll help you prepare
Navy Federal stays abreast of financial changes and stands ready to help you prepare for the future.