Posted byon March 16, 2017
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The 2017 Roth IRA limits and Roth 401k contribution limits will not change again this year. It’s time to start planning your contributions.
The 401k limits and IRA limits are determined based on inflation, but can only increase in $500 increments.
However, the 2017 social security wage base increased by $8,700.
The 2017 limits will stay the same for both the traditional IRA and the traditional 401k. In addition, the 401k limits are also the same for 403b plans and most 457 plans.
Here are the official contribution limits from the IRS:
|Roth 401k Contributions||2016||2017|
|Maximum||$ 18,000||$ 18,000|
|Catch-up 50 and over||$ 6,000||$ 6,000|
|Roth IRA Contributions||2016||2017|
|Maximum||$ 5,500||$ 5,500|
|Catch-up 50 and over||$ 1,000||$ 1,000|
You can make your 2017 contributions as early as January 1, 2017 for the whole year. If you contribute 2017 Roth IRA money between January 1 and April 18, be sure to designate calendar year 2017 if you have already contributed the maximum for 2016.
Since the 2017 limits will stay the same for both the Roth IRA and the Roth 401k, if you use automatic investments, you probably won’t have to make any changes. However, it’s always best to doublecheck your deferral rates.
To maximize your IRA investments, make sure you aren’t paying extra fees in your IRA. You can transfer your IRA to another broker to avoid annual fees. We use Vanguard for our IRAs.
The income limits for Roth contributions in 2017 went up slightly. You may contribute the full amount to your Roth IRA if your 2017 modified adjusted gross income is below $118,000 for singles ($186,000 for married). You may make partial contributions until your income hits $133,000 ($196,000 for married).
If your income is above that, you cannot contribute to a Roth IRA. If you are interested, there is a workaround called the Backdoor Roth IRA if your income is above the limits.
The deadline for 2016 IRA contributions is April 18, 2017, the same as the tax deadline.
401k contribution deadlines are based on the calendar year. 2016 401k contributions were due at the end of the year.