Pension Plan Limits for 2017 Announced by IRS

The Internal Revenue Service released 2017 tax year cost of living adjustments for pension plans and other retirement-related items.

The Internal Revenue Service released 2017 tax year cost of living adjustments for pension plans and other retirement-related items. Here is a summary of the more significant items for 2017.

Changes for 2017

Where a taxpayer (or their spouse) is covered by a retirement plan at work, their ability to deduct their contributions to a traditional individual retirement account (IRA) is subject to a phase-out based on the taxpayer’s filing status and income. (These phase-outs don’t apply if neither the taxpayer or their spouse is covered by a retirement plan at work.) The deduction phase-outs for IRS contributions for 2017 are as follows:

  • For single taxpayers covered by a workplace retirement plan, the phase-out range is $62,000 to $72,000 (up from $61,000 to $71,000).
  • For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $99,000 to $119,000 (up from $98,000 to $118,000).
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $186,000 and $196,000 (up from $184,000 and $194,000).
  • 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.

    For taxpayers making contributions to a Roth IRA, the income phase-out range for 2017 is:

    • For singles and heads of household, $118,000 to $133,000 (up from $117,000 to $132,000).
    • For married couples filing jointly, $186,000 to $196,000 (up from $184,000 to $194,000).
    • For a married individual filing a separate return, the contribution is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

    The income limit for the saver’s credit (also known as the retirement savings contributions credit) for low- and moderate-income workers is $62,000 for married couples filing jointly (up from $61,500); $46,500 for heads of household (up from $46,125); and $31,000 for singles and married individuals filing separately (up from $30,750).

    Certain Limits Unchanged

    • The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is unchanged for 2017 at $18,000.
    • The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is unchanged for 2017 at $6,000.
    • The limit on annual contributions to an IRA is unchanged for 2017 at $5,500. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains at $1,000 for 2017.

    For more information on IRS pension plan and retirement-related changes for 2017, see the IRS website and Notice 2016-62.