PhotoAn increase is on the way from the Internal Revenue Service pertaining to income ranges and determining eligibility for making deductible contributions to traditional IRAs, contributing to Roth IRAs, and claiming the saver’s credit.

You can deduct contributions to a traditional IRA if you meet certain conditions. For example, if during the year either you or your 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. If neither is covered, the phase-outs of the deduction do not apply.

Next year's phase-out ranges

  • 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, versus $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.

The new income phase-out range for taxpayers making contributions to a Roth IRA is $118,000 to $133,000 for singles and heads of household. This year it was $117,000 to $132,000.

For married couples filing jointly, the income phase-out range is now $186,000 to $196,000, versus $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.

The 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 $500; $46,500 for heads of household, up $375; and $31,000 for singles and married individuals filing separately, up $250.

No change for these limitations

  • The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains at $18,000.
  • 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 remains at $6,000.
  • The limit on annual contributions to an IRA is unchanged 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.

Details are outlined in IRS Notice 2016-62.


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