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Traditional IRA and Roth IRA Income Limits For 2017

The IRS adds some new rules and regulations every year, so even the pension plan and 401(k) does not escape changes. To make sure you stay up-to-date with the latest changes, here is an overview of the changes added in 2017.  401(k) Contribution Limit Remains Unchanged at $18,000 for 2017

Deducting Contributions Traditional IRA

To deduct contributions to a traditional IRA, you must meet certain conditions. If you were covered by a work pension plan this year, your deduction needs to be reduced of phased-out; this until the contribution is eliminated completely. Of course, this can also depend on your filing status and your overall income. If you are not covered by a retirement plan at work, then the phase-out deduction won’t apply to you.

Phase-Out Ranges For Traditional IRA 2017

  • For single taxpayers covered by a workplace retirement plan, the phase-out range is $62,000 to $72,000, up from $61,000 to $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 to $119,000, up from $98,000 to $118,000.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $186,000 and $196,000, up from $184,000 and $194,000.
  • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

Income Phase-Out Ranges For Roth IRA 2017

  • For Singles and heads of household it’s $118,000 to $133,000, up from $117,000 to $132,000.
  • For married couples filing jointly, the income phase-out range is $186,000 to $196,000, up from $184,000 to $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 to $10,000.

Income Limit for the Saver’s Credit

Also known as the retirement savings contributions credit

  • For low- and moderate-income workers is $62,000 for married couples filing jointly, up from $61,500;
  • $46,500 for heads of household, up from $46,125;
  • 31,000 for singles and married individuals filing separately, up from $30,750.

Unchanged Limitations

There are some limitations that have been unchanged. These limitations mostly pertain to 401(k), 403(b) and most 457 plans.

Firstly, the contribution limit for employees participating in plans such as 401(k), 403(b), 457 and federal government’s thrift savings remain unaltered and stay at $18,000.  The same applies to the catch-up contribution limit for employees 50 and older – who also contribute to the previously mentioned plan – remains the same at $6,000.

Lastly, the limit on annual contributions for the IRA also remains unchanged at $5,500. Any additional catch-up contributions for individual Americans of 50 years and older are not subject to annual cost-of-living adjustment. Therefore, the amount is still fixed on $1,000.

Detailed Information About Changes to Limitations

If you wish to learn more about the limitations that currently apply to pension plans, we recommend heading over to the IRS website for more information. The IRS will always post updates when they become available, so if you wish to make sure you are considering the right limitations, then be sure to head over the IRS website for more info.

While contribution limits only have been subject to minor changes over the years, it will be recommended to keep tabs on them for the coming years. With the Trump administration, changes in limitations as well as overall tax contributions are expected. So, to ensure you stay up-to-date with the latest developments, it is recommended to check in with the IRS regularly. Of course, you can also count on the Finance Genie to keep you informed about the latest developments!

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