Would-be retirees, listen up: the IRS has released costofliving adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2017.
Traditional IRA contributions are deductible under certain conditions, but if during the year either the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced or phased out until it is eliminated, depending on filing status and income.
For single taxpayers covered by a workplace retirement plan, the phase-out range is $62,000–$72,000, up from $61,000–$71,000. For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $99,000–$119,000, up from $98,000–$118,000.
For an IRA contributor not covered by a workplace retirement plan but married to someone who is covered, the deduction is phased out if the couple’s income is between $186,000–$196,000, up from $184,000–$194,000.
For a married individual covered by a workplace retirement plan and filing a separate return, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0–$10,000.
The income phase-out range for taxpayers contributing to a Roth IRA is $118,000–$133,000 for singles and heads of household; that’s up from $117,000–$132,000. For married couples filing jointly, the income phase-out range is $186,000–$196,000, up from $184,000–$194,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0–$10,000.
Those hoping to claim the saver’s credit for low- and moderate-income workers will have to make no more than $62,000 for married couples filing jointly; that’s up from $61,500. For heads of household, the limit is $46,500, up from $46,125; for singles and married individuals filing separately, it’s $31,000, up from $30,750.
Those hoping to get a jump on 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plans are out of luck, however, if they were hoping for higher contribution limits; existing 2016 limits remain unchanged at $18,000.
Other unchanged limitations include the catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan, which remains unchanged at $6,000, and the limit on annual contributions to an IRA, at $5,500.
The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
Additional information on changes, limits and technical guidance is available in Notice 2016-62.
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