Last week the IRS released the 2017 Retirement Plan contribution limits.
Some of the items remain unchanged from 2016, including the 401k/403b/457/TSP contribution limits of $18,000, contribution limits for Traditional IRAs and ROTH IRAs of $5,500, and catch up contributions for ages 50 and over of $6,000 for employer sponsored plans and $1,000 for Traditional and ROTH IRAs.
Though the contribution limits remain unchanged, the income ranges for determining eligibility have increased for 2017. Such income ranges apply to the deductibility of Traditional IRA and eligibility for ROTH IRA contributions and the Retirement Savings Contributions Credit.
Also, the Taxable Wage Base for Social Security has increased from $118,500 to $127,200 for 2017. This means for certain taxpayers an additional $8,700 of wages may be subject to the 6.2% Social Security tax, thus increasing the maximum annual contribution by $539.40. The 1.45% Medicare Tax still applies to all wages.
It is important to properly plan retirement savings strategies to fully utilize the tax benefits available within the allowed limits. Failure to comply with the limits may result in an excess contribution penalty of 6% per year on the amount over the limit. At Planned Solutions, we can help you determine eligibility for the retirement plans available to you and help you structure your income and deductions to maximize each benefit depending on your needs.