Photo (cc) by American Advisors Group
The Internal Revenue Service says retirement contribution limits will remain the same next year.
According to an IRS announcement on the cost-of-living adjustments for pension plans and other retirement-related matters for 2017, the annual contribution limits for 401(k) accounts — and other defined contribution plans such as the Thrift Savings Plan, 403(b) plans and most 457 plans — will remain at $18,000. That’s the same level it’s been since 2015.
The 401(k) catch-up contribution threshold, which allows workers ages 50 and up to save even more money for retirement, also stays the same — at $6,000 — for 2017.
It’s a similar story for IRAs. The IRS says you can contribute as much as $5,500 — the same amount established in 2015 — to an IRA or Roth IRA next year. The maximum catch-up contribution for IRAs also remains the same next year — at $1,000.
Although the contribution threshold is reviewed on an annual basis, it hasn’t budged in the past three years because it’s tied to inflation, which has remained low.
The IRS says there are a few adjustments to retirement plan limits planned for next year, including the following:
- Traditional IRA phase-out: The phase-out ranges for next year for traditional IRAs increased by $1,000 for single taxpayers and married couples.
- Roth IRA phase-out: The phase-out for singles and heads of household is $118,000 to $133,000 in 2017, up from $117,000 to $132,000. For married couples who file jointly, it’s increased from $184,000 to $194,000 (in 2016) to $186,00 to $196,000 next year. “If your income falls in or above those brackets, the amount you can contribute to a Roth is reduced or phases out entirely,” explains Money.
- Saver’s credit: The income limit for the retirement savings contribution credits for low- and moderate-income workers is moving from $61,500 to $62,000 in 2017 for married couples filing jointly, and from $30,750 to $31,000 for single workers or a married couple filing separately. The income limit for heads of household will be $46,500 in 2017, a change from $46,125 this year.
Click here to read more about the retirement plan changes.
How much are you saving for retirement? Share your comments below or on our Facebook page.