While the dawning of 2017 brings with it many significant changes, there are some that may impact you and your family’s financial standing more than others. Most notably, there are several new rules surrounding retirement accounts taking effect in 2017, including:
Higher IRA income limits. Employees who are covered by a retirement plan at work who earn $62,000 or less annually ($99,000 or less for couples) can take a full deduction up to the maximum contribution limit of $5,500 ($6,500 for ages 50 and older). The tax deduction is phased out for those earning between $62,000 and $72,000 ($99,000 and $119,000 for couples) this year.
Longer Roth IRA income cutoffs. Those who earn less than $118,000 annually ($186,000 for couples) can make contributions to a Roth IRA that may position them to receive tax-free retirement income. Roth IRA eligibility will be phased out for those who earn between $118,000 and $133,000 ($186,000 and $196,000 for couples).
Higher income threshold for the saver’s credit. Those who earn less than $31,000 annually ($62,000 for couples) might qualify for a credit worth 50%, 20%, or 10% of 401(k), Roth IRA, or IRA contributions up to $2,000 for individuals and $4,000 for couples, depending on adjusted gross income.
Special rules for those impacted by Hurricane Matthew. Those who live or work in FEMA-designated counties in North Carolina, South Carolina, Georgia, or Florida affected by the hurricane will be allowed to access hardship distributions and loans from 401(k)s, 403(b)s, and certain types of retirement accounts without the typical restrictions in order to cope with storm-related costs, including food and shelter. Distributions taken between October 4, 2016 (October 3, 2016 in Florida) and March 15, 2017 will qualify for this policy.
Please call our office at 814-536-1040 to learn more about these changes and what they might mean for you.