The IRS recently published the new contribution limits for various retirement plans for 2017. These limits are indexed to inflation, and as such sometimes they do not increase much year over year, and sometimes they don’t increase at all. This year for the third year in a row we saw virtually no increases contribution amounts, and the income limits increased for slightly as they did for 2016.
The annual contribution limit for IRAs (both traditional and Roth) remains at $5,500 for 2017 (third year without an increase). The “catch up” contribution amount, for folks age 50 or over, also remains at $1,000.
The income limits for traditional (deductible) IRAs increased slightly from last year: for singles covered by a retirement plan, your Modified Adjusted Gross Income (MAGI) must be less than $62,000 for a full deduction; phased deduction is allowed up to a MAGI of $72,000. This is an increase of $1,000 over the limits for 2016. For married folks filing jointly who are covered by a retirement plan by his or her employer, the MAGI limit is increased to $99,000, phased out at $119,000, also up $1,000 versus last year’s limits. For married folks filing jointly who are not covered by a workplace retirement plan but are married to someone who is covered, the MAGI limit for deduction is $186,000, phased out at $196,000; this is an increase of $2,000 over 2016’s limits.
The income limits for Roth IRA contributions also increased: single folks with a MAGI less than $118,000 can make a full contribution, and this is phased out up to a MAGI of $133,000, an increase of $1,000 at each end of the range. For married folks filing jointly, the MAGI limits are $186,000 to $196,000 for Roth contributions, up by $2,000 over 2016.
401(k), 403(b), 457 and SARSEP plans
For traditional employer-based retirement plans, the amount of deferred income allowed remains the same as the past two years. For 2016, employees are allowed to defer up to $18,000 with a catch up amount of $6,000 for those over age 50. If you happen to work for a governmental agency that offers a 457 plan in addition to a 401(k) or 403(b) plan, you can double up and defer as much as $36,000 plus catch-ups, for a total of $48,000 deferred.
The limits for contributions to Roth 401(k) and Roth 403(b) are the same as traditional plans – the limit is for all plans of that type in total. You are allowed to contribute up to the limit for either a Roth plan or a traditional plan, or a combination of the two.
Savings Incentive Match Plans for Employees (SIMPLE) deferral limit is also unchanged at $12,500 for 2017. The catch up amount is unchanged as well at $3,000, for folks at or older than age 50.
The income limits for receiving the Saver’s Credit for contributing to a retirement plan increased for 2017. The MAGI limit for married filing jointly increased from $61,500 to $62,000; for singles the limit is unchanged at $30,750; and for heads of household, the MAGI limit is $46,500, an increase from $46,125. The saver’s credit rewards low and moderate income taxpayers who are working hard and need more help saving for retirement. The table below provides more details on how the saver’s credit works:
Filing Status/Adjusted Gross Income for 2017
|Amount of Credit
||Married Filing Jointly
||Head of Household
|50% of first $2,000 deferred
||$0 to $37,000
||$0 to $27,750
||$0 to $18,500
|20% of first $2,000 deferred
||$37,001 to $40,000
||$27,751 to $30,000
||$18,501 to $20,000
|10% of first $2,000 deferred
||$40,001 to $62,000
||$30,001 to $46,500
||$20,001 to $30,750