By Kim Blankenstein
In our 2015 Allowable Tax and Retirement Benefits article, Mike highlighted some of the more popular deductions/tax benefits approved by the IRS for the 2015 Tax Year. Some other notable deductions/contribution limits are listed below:
Phase-out ranges for IRA contribution deductibility for individuals covered by an employer plan:
Full deduction is permitted below phase-out range, scaled partial deduction is permitted within range and no deduction is permitted above range.
Phase-out ranges for Roth contribution eligibility:
Full contribution is permitted below phase-out range, scaled partial contribution is permitted within range and no contribution is permitted above range.
Section 529 College Savings Account
No age or income restrictions for contributions or beneficiaries.
**Under a special rule, contributions of $70,000 ($140,000 for married, filing jointly) can be made in one year and prorated over a five year period without incurring gift taxes or reducing your unified and state tax credit. If the contributor dies before the five-year prorating period expires, the contributions allocated to the remaining years move back into the contributor’s taxable estate. Any appreciation on the entire original gift is not considered part of the estate.
Tax-free treatment applies to withdrawals used to pay for qualified higher-education expenses. The Pension Protection Act of 2006 made this benefit permanent. The earning portion of the withdrawals used for non-qualified expenses continue to be subject to federal income taxes plus an additional 10% tax penalty and may be subject to state and income or other taxes.