IRA Rules Changing


As tax season approaches, many small businesses are focused on the possible impact of the Affordable Care Act on this year’s tax bill and, ultimately, their bottom lines. The one-year reprieve from the so-called employer mandate expired at the end of 2014, and employers with 100 or more employees now must provide acceptable employee health coverage or face a stiff penalty of $ 2,000 per employee. Small businesses with fewer than 100 employees are not required to provide workers with health care until 2016.

But the ACA is not the only law with financial implications for small businesses that’s changing this year: There’s actually a bit of good news on the horizon, as well. Higher contribution limits for employer-sponsored retirement plans and higher income cutoffs for Roth IRA’s are two important changes that have positive implications for many business owners this year.

Higher Contribution Limits

Individuals now can save a maximum of $18,000 per year in an employer-sponsored retirement plan, an increase of $500 from 2014. Catch-up contributions for people 50 and older also have increased to $6000, making the grand total an individual can contribute towards retirement through an employer-sponsored plan $24,000 for 2015. Employee contributions must be made by the end of the calendar year; employer contributions are made separately and are due at the time the business files its income tax return in April or October 2015.

The limit for contributing to a traditional IRA or Roth IRA is unchanged: $5,500 per year with a $1000 catch-up for taxpayers 50 years or older.

 Higher income limits for Roth IRA

The federal government has increased the total income a taxpayer can earn and still be eligible for a Roth IRA. Income limits for 2015 are $183,000 to $193,000 for married taxpayers filing a joint return, up $2,000 from last year. Single taxpayers can earn $116,000 to $131,000, also an increase of $2,000 annually.

 New IRA Available

Small business owners whose income does not support a traditional IRA also got good news this year with the introduction of a new retirement vehicle, myIRA. Backed by the Treasury Department, these new accounts are open to individuals with an annual income of $131,000 or below, and married couples with an income of $193,000 or less annually. The account is a Roth IRA, which means that contributions can be withdrawn tax-free at any timtaxese and earnings can be distributed without penalty after 5 years if the account owner is at least 59 ½ years old. The money can be kept in the fund for up to 30 years, or until the balance reaches $15,000 at which time the money is transferred automatically to a traditional, private-sector retirement account.

Tax Saver Credit Changes

The income limits for the tax savers credit for low and middle income workers who contribute to an individual retirement account increased slightly this year to $30,500 for an individual, $45,750 for a single head of household and $61,000 for couples. The credit is worth between $1000 and $2000 in tax savings this year.

Not All Good News

On the down side, Social Security income limits increased slightly in 2015. Self-employed taxpayers will have to pay 12.4 percent social security tax on earnings of up to $118,500 in 2105, which means $1,500 more income is subject to the tax than last year.

Additionally, the IRS shed new light on its rules regarding IRA rollovers late last year, making clear that taxpayers are limited to only one IRA rollover every 12 months. In the past, many people believed that they could take unlimited distributions from any number of separate IRAs as long as the moved the money to another IRA within 60 days. The new ruling emphatically states that this is not the case.


Your accountant can help you understand the ins and outs of the tax code, but you need an insurance expert to help you manage your risk. Call the professionals at My Insurance Program at 516-292-3780 for a free consultation or get a no-obligation online quote today.



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