Taxpayers are about to get a bit more elbow room for retirement savings. Many contribution limits for employees with tax-favored retirement savings accounts were expanded for 2015, the Internal Revenue Service said Thursday.
The maximum for contributions in the government's Thrift Savings Plan, private sector 401(k)s and other comparable programs have been raised to $18,000, up from $17,500 in 2014 and 2013. For people over 50 years old, the "catch-up contribution" threshold has been increased from $5,500 to $6,000.
"You look at the $18,000 and wonder, gee, how many people can practically get to that level?" said Joe Ready, director of Wells Fargo Institutional Retirement and Trust. But as people "progress in their careers and earnings progressively go up," it will be increasingly important for elderly investors to max out the $24,000 limit, he said.
That's the combined total investment limit for people 50 and older—$18,000 for the 401(k) plus $6,000 for catch up.