If you have a 401(k) or some other similar contribution plan, the contribution thresholds aren’t altering but there are still some changes in the wind you should be aware of.
Each year the IRS makes cost of living adjustments to retirement related issues and pension plans. These adjustments are directly linked to inflation levels, which have remained consistently low since 2015. Therefore, there will not be any changes to the annual contribution limits on retirement contribution plans for 2017.
Currently the annual contribution limit for plans like the 401(k), the Thrift Savings Plan, 403(b) plans and nearly all 457 plans, is set at $18,000 and that will stay the same for 2017. Likewise, the catch-up threshold for 401(k) plans for people who are 50 or older is staying at $6,000 for 2017.
And if you have an IRA, it’s the same deal. You can currently contribute up to $5,500 to your IRA and if you’re 50 or older, the maximum catch up contribution is $1,000. Neither will be changing for 2017.
So what has changed?
Some changes have happened with retirement plan limits. Notably, the traditional IRA phase-out range has increased by $1,000 for both married couples and single tax payers.
The Roth IRA phase out ranges have also increased:
- From $117,000 - $132,000 to $118,000 - $133,000 for heads of households and singles.
- From $184,000 - $194,000 to $186,00 - $196,000 for married couples filing jointly
So if your income falls within those ranges or exceeds it, the amount you can contribute reduces proportionately until it phases out completely.
For low and moderate-income earners, the income limits to qualify for retirement savings contribution credits have increased:
- From $61,500 to $62,000 for couples who file jointly
- From $30,750 to $31,000 for singles or couples who file separately
- From $46,125 to $46,500 for heads of household
You can find out more about these and other changes to retirement plans here.