The Internal Revenue Service (IRS) has just announced retirement plan contribution limits for 2016, and most of the limits already placed for 2015 remain largely the same for 2016.
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The maximum contributions that can be made into 401k and IRAs among other plans for those running their own businesses will remain for 2016 as they currently have for 2015. There is a slight raise in income limits for what can be given to Roth IRAs, allowing savers to have credit and collecting deductions for constant IRAs when a spouse is covered under a workplace plan.
Here is the main gist:
For workplace plans – the limit for contribution into 401ks and 403bs as well as Thrift Savings Plan and most other 457 deferred compensation plans will remain $18,000 as we have this year. But for people over 50, their own stays at $24,000.
For IRAs – The contribution limit was raised to $5,500 in 2013, and it remains at this amount for 2016. But the catch-up contribution will be constant at $6,500.
For deductible IRAs – For those who are not covered by a workplace plan, they are free to deduct their IRA contribution without minding their income limits; for those covered by a workplace plan, the deduction is out with a modified adjusted gross income that is between $61,000 and $71,000 for individuals and family heads – just like in 2015.
Couples who are married and doing a joint filing has an income phase-out between $98,000 and $118,000 if one of them making an IRA contribution is covered by a workplace retirement plan.
But for people contributing to the plan without being covered by a workplace plan, the deduction phase-out is between $184,000 to $194,000 for 2016 if they are married to someone who is covered at the workplace, even though it is $183,000 to $193,000 respectively.
For Roth IRAs – The amount to be contributed for the other IRAs is $5,500 and an additional catch-up of $1,000 for people older than 50 years. Your contribution phases out at $184,000 to $194,000 for married couples filing together, even though it used to be $183,000 to $193,000 for this year. Singles have their own raised from $116,000 to $117,000 and family heads have theirs raised from $131,000 in 2015 to $132,000 in 2016.
For those running their own businesses and having small-business plans – their own limit remains at $53,000 for next year for SEP IRA or single 401k; but it is $12,500 for 2016 for SIMPLE retirement plan, and catch-up of $3,000 like it is in 2015.
For saver’s credit – AGI limits for retirement savings contribution credit increased from $500 to $61,500 for married couples doing a joint filing, and between $375 to $46,125 for household heads, and it is $250 to $30,750 for spouses filing differently or singles.
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