NEW YORK — The government won’t raise the limit on how much you can contribute to your retirement accounts next year.
You’ll be allowed to defer up to $18,000 of your salary to your 401(k) and contribute as much as $5,500 to your IRA or Roth IRA in 2017, the same as this year. (You can save a little bit more if you’re getting closer to retirement age. More on that below.)
The limits are reviewed annually and sometimes increased. But because of the current low inflation rate environment, they haven’t changed since 2015.
Accounts like the 401(k), IRA and Roth IRA are a great way to save for retirement because your money is allowed to grow tax-free. But there are limits on how much you can save and when you can withdraw the funds.
While the contribution limits will not change in 2017, the government will tweak the income limits on who can make contributions to a Roth IRA and who can claim a deduction for their contribution to a traditional IRA.
Here’s what you need to know.
How much can I contribute to my 401(k)?
You can defer as much as $18,000 of your paycheck to your 401(k). If you’re 50 or older, you may make a “catch-up” contribution of an additional $6,000, for a total of $24,000 next year.
These limits also apply to 403(b) plans and the federal government’s Thrift Savings Plan. They don’t include the matching contribution you may receive from your employer.
How much can I contribute to my IRA or Roth IRA?
You can contribute as much as $5,500. If you’re 50 or older, you can make a “catch-up” contribution of an additional $1,000, for a total of $6,500.
Can I contribute to a Roth IRA?
Not necessarily, since contributions are limited by your income. In general, you can contribute to a Roth IRA if you earn:
less than $133,00 and are single less than $196,000 and are married and filing jointly less than $10,000 and you’re married and filing separately
Can I deduct the contributions I make to my IRA?
A traditional IRA comes in two varieties: deductible and nondeductible. To see if you qualify for a deductible IRA, which lets you deduct all or part of your contributions from your taxable income, use the following guidelines.
If you don’t have a retirement plan at work and you’re under 70 ½, you can deduct the entire amount from your taxes. If you have a retirement plan at work, you may fully or partially deduct your contribution only if your adjusted gross income (AGI) qualifies. For 2017, the deductions are phased out entirely for singles earning over $72,000 or couples earning over $119,000. If you’re not covered by a retirement plan at work, but your spouse is, you may qualify for a full or partial deduction if you file jointly and your AGI is below $196,000 for the 2017 tax year.