In case you missed it, the contribution limits to your 401(k) plan, IRA and Roth IRA—set by the government each year based on the inflation rate—will not go up in 2017. Just like 2016, you will be able to defer up to $18,000 of your paycheck to your 401(k), and individuals over age 50 will still be able to make a “catch-up” contribution of an additional $6,000. (The same limits apply to 403(b) plans and the federal government’s new Thrift Savings Plan.) Your IRA and Roth IRA contributions will continue to max out at $5,500, plus a $1,000 “catch-up” contribution for persons 50 or older.
SEP IRA and Solo 401(k) contribution limits, meanwhile, will go up from $53,000 this year to $54,000 in 2017.
The government has made small changes to the income limits on who can make deductions to a Roth IRA and who can claim a deduction for their contribution to a traditional IRA. The phase-out schedule for single filers for 2016 starts at $117,000 and contributions are entirely phased out at $132,000; for joint filers the current range is $186,000 to $196,000. In 2017, the single phase-out will run $1,000 higher, from $118,000 to $133,000; and the joint phase-out threshold will rise $2,000, to $188,000 up to $198,000.
Single persons who have a retirement plan at work will see the income at which they can no longer deduct their IRA contributions go up to $1,000 as well, with the phase-out starting at $62,000 and ending at $72,000. Couples will see their phase-out schedule rise to $99,000 to $119,000.
While there have been little to no changes to retirement contribution limits for 2017, that doesn’t mean your financial situation is still the same. It is still essential to review your financial plan for the upcoming year. Is your current retirement savings plan still prudent for your personal financial circumstances? If you should have any questions, please feel free to contact Waller Financial Planning Group.