In 2017, you have another chance to max out your retirement accounts. Here is a rundown of yearly contribution limits for popular retirement savings vehicles.
IRAs. The 2017 limits are the same as in 2016: $5,500 for IRA owners who will be 49 and younger this year, and $6,500 for IRA owners who will be 50 or older this year. These limits apply to both Roth and traditional IRAs.1
What if you own multiple IRAs? This $5,500/$6,500 limit applies to your total IRA contributions for a calendar year. So, for example, should you happen to have five IRAs, you could make an equal contribution of $1,100 (or $1,300) to each of them in 2017, or unequal contributions to them not exceeding the applicable $5,500/$6,500 limit.1
Keep in mind that you can fund your 2016 IRA(s) until April 18, 2017, the 2017 federal income tax deadline. It is best to fund your IRA for a particular year right as that year starts, but if you procrastinated for any reason in 2016, you still have time.2
High earners may find their ability to make a full Roth IRA contribution restricted. This applies to a single filer or head of household whose modified adjusted gross income (MAGI) falls within the $118,000 to $133,000 range, and to married couples with a MAGI of $186,000 to $196,000. If your MAGI exceeds the high ends of those phase-out ranges, you may not make a 2017 Roth IRA contribution. (For tax year 2016, the respective phase-out ranges are $117,000 to $132,000 and $184,000 to $194,000.)3
401(k)s, 403(b)s and 457s. Each of these workplace retirement plans have 2017 contribution limits of $18,000, or $24,000 if you will be 50 or older this year. If you are a participant in a 457 plan and within three years of what your employer deems “normal” retirement age, you can contribute up to $36,000 annually to your plan during the last three years preceding that “normal” retirement date.3,4
SIMPLE IRAs and SEP-IRAs. In 2017, the contribution limit for a SIMPLE IRA is $12,500; those who will be 50 or older this year may contribute up to $15,500. Federal law requires business owners to match these annual contributions to at least some degree; self-employed individuals can make both employee and employer contributions to a SIMPLE IRA.5
Business owners and the self-employed can contribute to SEP-IRAs, which, like Roth IRAs, only accept contributions of pre-tax dollars. Therefore, SEP-IRA contributions will not reduce your taxable income. As a tradeoff, the annual contribution limit on a SEP-IRA is very high – in 2017, it is either $54,000 or 25% of your income, whichever is lower.5
1 – fool.com/retirement/2017/01/17/roth-vs-traditional-ira-which-is-better.aspx [1/17/17]
2 – money.usnews.com/money/retirement/iras/articles/2016-12-19/how-saving-in-an-ira-can-reduce-your-2016-tax-bill [12/19/16]
3 – forbes.com/sites/ashleaebeling/2016/10/27/irs-announces-2017-retirement-plans-contributions-limits-for-401ks-and-more/ [10/27/16]
4 – fool.com/retirement/2016/12/19/457-plan-contribution-limits-in-2017.aspx [12/19/16]
5 – money.cnn.com/2017/01/13/retirement/ira-myths/ [1/13/17]
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