Every year around this time, IRS publishes a Revenue Procedure that sets out the estate and gift tax limits for the following year. This year, Revenue Procedure 2014-61 sets them as follows:
1. Each individual's "Lifetime Gift Exclusion" is raised from $5,340,000 to $5,430,000, an increase of $90,000;
2. The amount a spouse can gift to a non-citizen spouse increases from $145,000 per year, to $147,000 per year;
3. The most commonly known exemption, the $14,000 annual exclusion gift, stays at the same amount for 2015.
These are not particularly large, or particularly surprising changes, and for most clients will not affect their overall planning. If, due to fears related to the changes in the Estate Tax in 2012, you made a gift of your full exemption, this means you now have a little more to give.
Far more important to most clients are changes in the 2015 Retirement Plan Contribution limits.
The contribution limit (technically the elective deferral limit) for employees in a 401(k), 403(b), most 457 plans, and the Thrift Savings Plan is increased from $17,500 to $18,000, while the catch-up contribution limit for employees aged 50 and over increased from $5,500 to $6,000. That makes the total allowable contribution for an employee over 50 $24,000 for these plans.
For more detail on the retirement plan contribution limits, as well as updated detail on the various AGI phase outs for IRA and Roth contributions, see the IRS announcement for October 23, 2014.