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New Qualified Plan and IRA Contribution Limits for 2017

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Have you begun contributing to your retirement account this year? You may find your contribution options have changed for Tax Year 2017.

While most qualified plan and IRA contribution limits remain the same for Tax Year 2017, there are exceptions.

Traditional IRA and Roth IRA contribution limits remain at $5,500 for Tax Year 2017, with an additional $1,000 allowed for those 50 or over. SIMPLE IRA employee contribution limits also remain unchanged. Employee contributions to SIMPLE accounts may not exceed $12,500 (or $15,500 for those 50 or over).

QP & IRA Contribution Limits for 2017401(k) and 403(b) plans maintain a salary deferral limit of $18,000, with an additional $6,000 for those 50 or older. This limit is aggregated for these two types as well as SIMPLE IRAs, SIMPLE 401(k) plans and SARSEPs. Click here to learn more about how much you, the employee, can defer if you’re eligible for more than one of these plans.

However, if you hold a SEP IRA or Solo 401(k), the employer contribution limit increases to $54,000 (a $1,000 increase) for Tax Year 2017. This amount may not exceed 25% of your compensation.

Those with a 401(k) plan and earning up to $62,000 (or $99,000 for married couples) can defer paying taxes on IRA contributions up to the contribution limit in 2017. The phase out range for the tax deduction is from $62,000 to $72,000 (or $99,000 to $119,000 for married couples). An individual without a 401(k) but who is married to a 401(k)-plan participant has an income threshold of $186,000 to $196,000. If you or your spouse do not participate in a 401(k) plan, then you may deduct IRA contributions in full—up to the contribution limit, of course.

In addition, Roth IRA eligibility limits increase for Tax Year 2017. You can earn an additional $1,000 (or $2,000 for married couples) to remain eligible. Single individuals with a modified adjusted gross income (MAGI) of less than $118,000 (or $186,000 for couples) may make Roth IRA contributions. The phase out ends at $133,000, or $196,000 for couples.

Remember you still have a few weeks left to make contributions for Tax Year 2016. The deadline is Tax Day, which falls on Tuesday, April 18.

When making a deposit, be sure to note whether you want the contribution applied to Tax Year 2016 or Tax Year 2017. Custodians will automatically apply the contributions to the year in which they are received unless you specify on the form the deposit is for the previous calendar year.

Kingdom Trust clients can visit our Manage My Account page for instructions to deposit funds, which allow for easy designation for the tax year contribution. Regular contributions help to maximize potential retirement benefits. The sooner you make contributions to a retirement account, the sooner you might benefit from any investment income or gains.

Kingdom Trust will keep our clients and website visitors up to date on similar changes so you may be aware of how they might affect your retirement savings.