Retirement Ramp Up: The IRS Boosts 401(k) Contribution Limits

Retirement Ramp Up: The IRS Boosts 401(k) Contribution Limits

Once 2015 rolls around, you'll have more than just the New Year to celebrate.

On Thursday, the IRS announced new contribution limits for retirement plans, including a $500 increase in how much Americans can now contribute to their 401(k)s and other savings vehicles.

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Come January, Americans will be able to contribute up to $18,000 to a 401(k), 403(b), most 457s, and the federal Thrift Savings Plan, up from $17,500 in 2013 and 2014. Catch-up contributions for savers age 50 and older with those plans also rose by $500, increasing to $6,000. (Meanwhile, the contribution limits for Roth and Traditional IRAs remain unchanged at $5,500.)

The 401(k) increase, which helps account for the rise in the cost of living, allows workers to put away even more of their pre-tax dollars toward retirement—which, in turn, helps lower their taxable income. And given concerns like potential cuts to Social Security, any additional amount that Americans can sock away toward retirement helps.

“If you look back to 2009, limits on 401(k) were around $16,000,” Kevin Crain, Bank of America Merrill Lynch’s managing director, tells CNBC. “These aren’t huge bumps, but it’s slowly incrementing upwards and it’s a nice message on the opportunity and power to save.”

Of course, an IRS boost in the contribution limits shouldn't be your only trigger to save more for retirement. Here are six easy moves you can make now to bump up your nest egg.

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