The elective deferral or “contribution” limit for individuals who choose to participate in various 457 plans, 401(k), 403(b) and other government saving plans has remained unchanged between the years of 2015 and 2016. While many things to do with the government and savings see frequent changes across the years, the 401k contribution limits 2016 remained steady at $18,000.
Regular and Roth IRA contributions were also left unchanged from their numbers in 2015, coming out at around $5,500 for 2016. The limit for catch-up contributions for employees aged fifty or over that participate in 401(k) savings has also stayed the same at $6,000.
Contribution Limits Explained:
The contribution limits that have been put in place help individuals to better understand their finances and financial needs. These contribution limits will dictate the quality of life that you are able to maintain when you are retired, and can assist you in making decisions on how much should be placed into your pension or savings at any given time.
When discussing the 401k contribution limits 2016, it may also be worth looking into deduction limits. The deduction for taxpayers that continue to make payments and contributions into a traditional IRA fund has been phased out for singles and heads of household who are now covered for their pensions by a workplace plan for retirement. This also applies to individuals who have modified their gross income between $61,000 and $71,000. These rules remained unchanged since 2015.
For married couples who choose to file jointly, in cases wherein the spouse responsible for making the IRA contribution is managed through a workplace plan for retirement, the phase-out income range is between $98,000, and $118,000, which is a significant increase from 2015. For IRA contributions from individuals who are not covered by workplace retirement plans, but are married to people who are covered, the deduction can be phased out if the couple’s income is between $183,000, and $193,000 combined.
The Information on AGI Details:
Finally, one last thing to note when discussing 401k contribution limits 2016 is the AGI range. The AGI range for phasing out for people who make contributions into a Roth IRA is currently $185,000 to $194,000 when applied to couples that are filing jointly. This is an increase of around $1,000 from 2015. For heads of household and single people, the phase out range for income is currently between $117,000 and $132,000, which is a further increase from 2015. For a married person who chooses to file a separate retirement plan at work, the phase out remains the same at approximately $0, to $10,000.
The limit for AGI saver’s credit, which is also known as a retirement savings contribution credit for workers with low or moderate income is around $61,000 for couples that choose to file jointly, $45,750 for heads of the household, and $30,500 for married individuals who want to file separately.
If you need to learn more about the details surrounding your 401k, and the contributions that can be made into your pension plans during any given year without tax issues, it is important to do your research. Find out more from the IRS website or browse online for extra information.
