We’re in that special time of year when the IRS announces its cost-of-living adjustments for various tax issues. Many of these changes are relevant to estate planning and retirement saving, so here are some of the highlights:
- The federal basic exclusion amount for the estate tax will rise to $5,430,000 from $5,340,000, striking fear into anyone who has ever transposed numbers;
- The annual gift tax exclusion stays put at $14,000;
- The annual contribution limit for 401(k), 403(b), and 457 plans will increase to $18,000 from $17,500;
- The catch-up contribution limit to 401(k), 403(b), and 457 plans (these contributions can only be made by participants age 50 or older) will go up to $6,000 from $5,500;
- The IRA contribution limit holds steady at $5,500; the catch-up contribution limit for IRAs is not subject to inflation adjustments, so it also remains at $1,000.
Tax brackets and personal exemptions are changing for 2015, and Kelly Phillips Erb, contributing to Forbes, has coverage of those.