2015 Tax Update

As we head into the homestretch of 2014, now is a good time to provide an update for the tax-related changes you can expect for 2015.  Some of these will be purely informational; some of them should spur you to take action so you are prepared when the year begins. Social Security Social Security benefits will increase by 1.7% beginning in January to account for cost-of-living increases. For those individuals receiving Social Security benefits prior to Full Retirement Age (FRA) for Social Security, the earnings limit for 2015 is $15,720. For every $2 in earnings above the limit, $1 in SS benefits will be withheld. For employees, Social Security and Medicare tax withholding are as follows: Social Security taxes will be withheld at a rate of 6.2% for employees up to a wage base of $118,500, or a maximum of $7,347 for 2015. Medicare taxes are withheld at a rate of 1.45% for employees for all wages, with no maximum wage base. The Medicare surtax will be withheld by employers for those employees whose wages exceed $200,000, at an additional Read on! →

2015: New Rule for After-Tax Contributions to Your Qualified Retirement Plan

Will a tax incentive motivate you to save more? The reality for most is a resounding, YES. If this sounds like you, you may be interested to learn about a new rule regarding after-tax contributions that may affect your 401(k) Plan in 2015. A recent ruling by the IRS may give many small business owners and high wage earners incentive to contribute more to 401(k) plans.  Beginning in 2015, eligible employees will be allowed to shift after-tax 401(k) contributions directly to a Roth IRA upon separation from service.  For individuals who can easily exceed 401(k) pretax contribution limits or income limits for Roth IRA contributions, this means there is a new option for additional retirement savings and the potential for substantial tax savings during retirement. The Roth IRA Advantage In 2015, couples earning $193,000 or more and individuals earning $131,000 or more are not eligible to directly contribute to a Roth IRA.  For couples and individuals whose earnings are under these thresholds, contributions up to $5,500 (plus $1,000 “catch up” if 50 or older) per year are allowed. The advantages Read on! →