Each year, retirement savers, accountants, wealth managers, investors and others eagerly await the government's ruling on the annual IRA tax deductible contribution limit. Well, the results are in and the IRS has published its annual 2016-62 memo that clarifies the numbers. Savers and professionals will use these numbers to make their monthly and annual allotments. They divert the funds into specific investment accounts that are especially vulnerable to tax consequences. Over time, the annual deductions can help rapidly grow investment savings and reduce tax fees.
Limit Stays the Same
The limit for traditional IRAs and Roth IRAs will stay exactly the same as last year. In 2017, the limit for those under 50 will be $5,500 of tax deductible savings. For those over 50 and under 70.5, they can add an additional $1,000 to total $6,500 in tax deductible savings.
These tax deductible savings are also income based for both singles and married. Single people with Roth IRAs that make over $118,000 start to see reduced eligible tax savings and those that make over $133,000 cannot save anything at all tax free. These numbers are each $1,000 greater than last year. The slow annual increase is due to the slow level of income growth.
Married individuals and certain widowers that jointly make over $186,000 see reduced savings and cannot take any deductions if they jointly make more than $196,000. Those numbers are each $2,000 greater than last year.
Now that IRA contribution limit numbers are out, professionals can be sure to make the right allocations and investments. They can set their tax returns and be all set to file at the beginning of next year.