2017 IRA, ROTH IRA and 401(k) Contribution Limits

Welcome 2017! A new year, which means among many other things, a new year to invest in your IRA, ROTH IRA and/or 401(k). Here are the limits for contributions to IRAs, ROTH IRAs and 401(k)s, and how much you need to be saving each month or each bi-weekly paycheck to reach those limits:

2017-ira_401k-contribution-limits

(Click to enlarge)

 

Confused? (It’s the IRS tax laws – of course you are!) Here it is in text and some of the fine print:

 

IRA CONTRIBUTION LIMITS FOR 2017

  • For 2017 the limit for contributions in Traditional IRAs and ROTH IRAs for those under the age of 50 is $5,500.

That equates to $458 per month to maximize your IRA contributions, or $211 Bi-Weekly.

 

  • For those 50 years old or older, your limit is $6,500 (You get $1,000 in “catch up” contributions).

That equates to $541 per month, or $250 Bi-Weekly.

 

IRA DEDUCTION LIMITS FOR 2017

 

Traditional IRA contributions are generally tax deductible. However, if you are covered by a retirement plan by your employer, there are income caps where your contribution may not be tax deductible:

  • If you are married and file jointly and have a modified AGI of greater than $119,000 you do not get a deduction from your IRA contribution. You are only eligible for a partial deduction if your modified AGI is between $99,000 and $119,000.

 

  • If you are single and have a modified AGI of greater than $72,000 you do not get a deduction from your IRA contributions. You are only eligible for a partial deduction if your modified AGI is between $62,000 and $72,000.

 

Want to see it another way? Here is how the IRS lays it out:

ira_deduction_limits_for_2017

(Found on the IRS’s website here: http://www.irs.gov/Retirement-Plans/2017-IRA-Deduction-Limits-Effect-of-Modified-AGI-on-Deduction-if-You-Are-Covered-by-a-Retirement-Plan-at-Work)

 

ROTH IRA RULES FOR 2017

  • You are *Generally* not eligible for ROTH IRA contributions if:
    • You are married, file taxes jointly and have a modified adjusted gross income (AGI) of greater than $194,000
    • You are single, or file taxes separately and have a modified adjusted gross income of greater than $132,000

However, if you have a modified AGI between $184,000 and $194,000  and are married and file jointly you are eligible for a reduced ROTH IRA contribution. Likewise, if you are single, file separately have a modified AGI between $117,000 and $132,000 you are also eligible for a reduced ROTH IRA contribution.

 

Take a look at the IRS’s table to see it another way:

roth_ira_income_eligibility_limits_for_2017

 

 

Image comes from the IRS’s website here: https://www.irs.gov/publications/p590a/ch02.html#en_US_2016_publink1000230977

The link above also includes a worksheet to determine your reduced contribution amount if your income is between $117,000 and $132,000 for single filers or $184,000 and $194,000 for married filers.

 

401(k) CONTRIBUTION LIMITS FOR 2017

 

  • For 2017 the limit for contributions 401(k)s for those under the age of 50 is $18,000.

That equates to $1500 per month to maximize your 401(k) contributions, or $692 Bi-Weekly.

401k_contribution_limits_for_2017_18k

 

  • For those 50 years old or older, your limit is $24,000 (You get $6,000 in “catch up” contributions).

That equates to $2000 per month, or $923 Bi-Weekly.

 

401k_catch_up_contribution_limits_for_2017_24k

 

Found here: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits

 

 

Clear as mud?

 

Happy 2017!

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