New Pension Plan Limitations Announced
As is typical, the government is making annual adjustments to various retirement plan limits. In many cases, those whose incomes are at higher levels may find they can put away a few more dollars.
To start with, the government has made changes regarding the deduction of contributions to traditional IRAs when you or your spouse are also covered by a retirement plan at work. The amounts above which the contribution deductions are being phased out have been raised.
- For single taxpayers covered by a workplace plan, the phase-out starts at $66,000, and that's up from $65,000.
- For married couples filing jointly, the phase-out starts at $105,000, up from $104,000.
- For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
The income phase-out for taxpayers making contributions to a Roth IRA starts at $124,000 for singles and heads of households. For married couples filing jointly and qualifying widow(er)s, the income phase-out starts at $196,000.
The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
The income limit for the saver's credit, which is also known as the retirement savings contributions credit, for low- to moderate-income workers is $66,000 for married couples filing jointly, up from $65,000; $49,500 for heads of households, up from $48,750; and, $33,000 for singles and married individuals filing separately, up from $32,500.
Some limitations remain unchanged — and here are some to take notice of:
- The contribution limit for employees who participate in 401(k), 403(b) or most 457 plans, or the federal government's Thrift Savings Plan, remains unchanged at $19,500.
- The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b) or most 457 plans, or the federal government's Thrift Savings Plan, remains unchanged at $6,500.
- The limit on annual contributions to an IRA remains unchanged at $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
Finally, note that these numbers change regularly, so be sure to check current rules with an authoritative source before making decisions.
These rules can get complicated, so if you're unsure about how these changes affect your retirement accounts, consult with a financial professional who can go into the details.