As is the case every year, the New Year brings changes for retirement plan contributions and limits, though 2017 will have more muted changes than most years. Retirement plans, like employer-sponsored plans and self-employed plans, will be affected. With inflation being on the low end of the scale, the changes in contribution limits generally remain unchanged for 2017, while income limits will increase modestly in some cases.
Below are the 2017 limits for the most popular retirement plans, including 401(k)s and IRAs.
Employer-Sponsored Retirement Plan Limits
401(k) plans. For all employer-sponsored retirement plans — like 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan — the contribution limits for 2017 are $18,000.
401(k) catch-up. The catch-up contribution limit for employees ages 50 or older who participate in the above mentioned plans remains at $6,000 for 2017. Even if you don’t turn 50 until Dec. 31, 2017, you can make the additional $6,000 catch-up provision for the current year.
IRA plans. IRA (or Individual Retirement Account) contribution limits have stayed the same since 2013. The annual $5,500 limit remains unchanged in 2017, and many blame this on low-inflation problems. Additionally, the catch-up provision for IRAs is unchanged at $1,000 because it is not subject to an annual cost-of-living adjustment. This makes the maximum IRA contribution for those 50 and older $6,500 for 2017.
Traditional IRA Income Limits
If you or your spouse is covered by another retirement plan, IRAs have income limits beyond which their tax deductibility is phased out, until it disappears completely.
Here are the income range phaseouts for 2017 for those who are covered by another retirement plan — they apply strictly to deductible traditional IRAs:
- Single taxpayers — between $62,000 and $72,000
- Married filing jointly — between $99,000 and $119,000
- Married filing jointly in which the spouse making the IRA contribution is NOT covered by a pension, but the other spouse is — between $186,000 and $196,000
- Married filing separately — between $0 and $10,000
Roth IRA Income Limits
Roth IRA eligibility is also subject to phaseout based on income, but those limits are different than what they are for traditional IRAs. The income level phaseouts for 2017 are as follows:
- Single taxpayers — between $118,000 and $133,000
- Married filing jointly — between $186,000 and $196,000
- Married filing separately — between $0 to $10,000
SEP IRA, SIMPLE IRAs, and Solo 401(k) Plans
There have been a few slight changes to contribution levels for self-employed retirement plans in 2017, compared with 2016:
SIMPLE IRA. $12,500 in 2017. The catch-up provision for taxpayers age 50 and older remains unchanged at $3,000 in 2017.
SEP IRA. Has increased to $54,000 in 2017. SEP IRA contribution maximums are based on a contribution rate of up to 25% of gross income (after subtracting out the amount of the contribution itself). That income limit has ticked up to $270,000 in 2017.
Solo 401(k). Matching the employee 401(k) limits, contributions to a Solo 401(k) are the same as the SEP IRA contribution limits. They have also increased to $54,000 in 2017. The catch-up provision for taxpayers age 50 and older remains unchanged at $6,000 in 2017.
2017 Retirement Contribution Limits Table
|401(k), 403(b), or 457 plans||$18,000||$18,000||None|
|50+ catch-up limits for above||$6,000||$6,000||None|
|Traditional IRA plans||$5,500||$5,500||None|
|Roth IRA plans||$5,500||$5,500||None|
|50+ catch-up limit for IRAs||$1,000||$1,000||None|
|50+ catch-up limit for SIMPLE IRA||$3,000||$3,000||None|
|50+ catch-up limit for Solo 401(k)||$6,000||$6,000||None|
Retirement Saver’s Credit Changes
When contributing to a retirement account, whether an employer-sponsored plan or an IRA, you could be eligible for a tax credit on your income tax return. For 2017 the AGI (Adjusted Gross Income) limit for the saver’s credit (also known as the retirement savings contribution credit) is $62,000 for couples married filing jointly, up from $62,500 in 2016, and $46,500 in 2017 for heads of household, up from $46,125 in 2016.
For single individuals or those married filing separately, the limit is $31,000 for 2017, up from $30,750 in 2016. This credit is an incentive targeted at low- and moderate-income workers to encourage retirement savings.
Note: The IRS releases updated limits for the following year in October. Check back after October 2017 for the updated 2018 limits.