Types of Retirement Plan Contributions

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Types of Retirement Plan Contributions

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You may be able to choose the type of retirement plan contributions you make to your plan
If you participate in an employer-sponsored retirement plan, you may be able to choose the type of contributions you can make from your wages to the plan. For example, your plan may allow you to make:
• Pre-tax elective deferrals — You don’t include these amounts in your gross income in the year that you make the contributions. For example, if you direct your employer to contribute $2,000 from your $30,000 salary in 2015, you only include $28,000 in income. You have to include these contributions, plus any earnings, in your income when you withdraw them from the plan.
• Designated Roth contributions — These are elective deferrals that are included in your gross income in the year you make the contributions, but not when you withdraw them from the plan. Also, if you meet certain conditions, you don’t have to include any earnings on these contributions in your income when you withdraw them from the plan.
• After-tax employee contributions — These amounts are also included in your gross income in the year you make the contributions. Although you don’t have to include these contributions in income when you withdraw them from the plan, you do have to include any earnings. Unlike elective deferrals, there is no annual dollar limit on the amount of these contributions you can make, but if you are a highly compensated employee, your after-tax employee contributions may be limited by what other employees contribute.
• Catch-up contributions — These are additional elective deferrals that you may be able to contribute to the plan if you are age 50 or older by the end of the calendar year. You can make these contributions as pre-tax elective deferrals or designated Roth contributions, or any combination of the two.
2015 elective deferral limits:
• $18,000 to 401(k) (other than a SIMPLE 401(k)), 403(b) and 457(b) plans, plus $6,000 catch-up contributions
• $12,500 to SIMPLE plans, plus $3,000 catch-up contributions

Ask your employer or check your plan documents to find out what types of contributions you can make to your employer’s retirement plan. ________________________________________________________________
NOTE TO EDITOR: Below are links to helpful retirement information on IRS.gov.
• Types of Retirement Plans – explains different types of retirement plans, including the amount and types of contributions that you can make to the plans.
• Tax Information for Retirement Plans - Resources for Individuals – lists the benefits of participating in a retirement plan, how to join and contribute to the plan, and tax on amounts you receive from the plan.
• Retirement Saving Tips for Individuals – contains information on how to save for retirement and understand your employer’s plan.
• Retirement Plans Frequently Asked Questions – answers common questions on a variety of retirement plan topics.
On Twitter? Send these Tweets:
• Tips on how to take responsibility for your #retirement http://go.usa.gov/3fGwm #IRS
• Learn the benefits of saving now for your #retirement http://go.usa.gov/3fGfY #IRS
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