Because the cost-of-living index did not go up enough to trigger increases, the IRS announced that the limit on elective deferral for contributions to 401(k) plans, 403(b) plans, most 457 plans, and the federal government’s Thrift Savings Plan remains at $18,000 for 2016 and the catch-up contribution limit for those 50 and older remains at $6,000 (IR-2015-118). Amounts for some other retirement savings plans did increase, however.
The ability of taxpayers who are covered by workplace retirement plans to make a deductible individual retirement arrangement (IRA) contribution is phased out for singles and heads of household who have modified adjusted gross incomes (AGIs) between $61,000 and $71,000. For married couples filing jointly, where the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phaseout range is $98,000 to $118,000 for 2016. These amounts are unchanged from 2015. When an IRA contributor is not covered by a workplace retirement plan but is married to someone who is, the deduction is phased out if the couple’s income is between $184,000 and $194,000, which is an increase from 2015.
For taxpayers making contributions to Roth IRAs, the phaseout range for determining the maximum contribution is $184,000 to $194,000 for married couples filing jointly and $117,000 to $132,000 for singles and heads of household. These limits are increases from 2015.
The AGI limit for the saver’s credit is $61,500 for married couples filing jointly, $46,125 for heads of household, and $30,750 for single taxpayers and for married individuals filing separately, all increases from 2015.
—Sally P. Schreiber (firstname.lastname@example.org) is a JofA senior editor.