This year, new rules surrounding retirement investing could make a difference to your long-term plans. Even if your nest egg is in the hands of a trusted financial advisor, you should be aware of what the tax implications mean for you today—and in the long run. Here are two significant changes and one standing rule that could impact your retirement savings.
1. Growing an IRA becomes easier for some, harder for others. Starting in 2017, workers earning less than $118,000 ($186,000 for couples) are eligible to make Roth IRA contributions toward the possibility of tax-free retirement income. However, this year, Roth IRA eligibility will be phased out for those earning between $118,000 and $133,000 ($186,000 to $196,000 for couples).
Did You Know?
Only 29% of Americans report that they feel confident they saved enough in 2016.*
2. The entry point to take a retirement savings tax credit increases.
Adults 18+* may be able to take a tax credit for making eligible contributions to their IRA or employer-sponsored retirement plans.
The amount of the credit is 50%, 20%, or 10% of your retirement plan or IRA contributions, depending on your adjusted gross income.
3. Retirement plan contribution levels remain the same. The contribution limit for employees who participate in 401(k), 403(b), and 457 plans and the Thrift Savings Plan will hold at $18,000 for 2017, with the catch-up contribution limit for those aged 50-plus unchanged at $6,000 (for a total of $24,000). Likewise, the limit on total annual contributions to traditional and Roth IRAs remains at $5,500, or $6,500 if you’re 50 or older.