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2017 IRA Contribution Limits

Coin in piggybank

  |  By Christopher Orr, SDIP

The IRS hasn’t raised IRA contribution limits since 2013 and, unfortunately, that streak will continue into 2017.

As inflation stays persistently low, cost-of-living thresholds that would trigger an increase in contribution limits for traditional IRAs and Roth IRAs in 2017 were not met. Given this, the IRS said that traditional IRA and Roth IRA contribution limits will remain at $5,500 in 2017, with an additional $1,000 catch-up contribution for investors who are aged 50 and older.

But the IRS did announce other retirement savings changes for 2017, especially when it comes to being able to deduct part or all of you IRA contributions from your taxable income. IRA deductions may be reduced, phased out or completely eliminated based on an investor’s filing status and income.

Here are the income phase-out ranges for 2017 for investors who own a traditional IRA:

  • For single taxpayers who are covered by a workplace retirement plan, the phase-out range in 2017 is $62,000 to $72,000, up from $61,000 to $71,000 in 2016.
  • For married couples who file jointly -- where the spouse making the IRA contribution is covered by a workplace retirement plan -- the phase-out range is $99,000 to $119,000. That is up from $98,000 to $118,000 in 2016.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out in 2017 if the couple’s income is between $186,000 and $196,000. That is up from $184,000 and $194,000 in 2016.
  • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

These phase-outs do not apply if you or your spouse are not covered by a retirement plan at work.

Here are the income phase-out ranges for 2017 investors who own a Roth IRA:

  • The income phase-out range for taxpayers making contributions to a Roth IRA is $118,000 to $133,000 for taxpayers those who are single and those who are the heads of a household in 2017. That will rise from $117,000 to $132,000 in 2016. 
  • For married couples filing jointly, the 2017 income phase-out range is $186,000 to $196,000, up from $184,000 to $194,000 in 2016.
  • For a married individual filing a separate return -- who makes contributions to a ROTH IRA -- he/she is not subject to an annual cost-of-living adjustment and remains at $0 to $10,000.

To get a full list of IRA contribution limits, you can visit PENSCO’s IRA contribution limits and deadlines page.

Although IRA contributions limits will not be changing in 2017, it is still important to make these yearly contributions.  Compared to a taxable account, holdings in a traditional IRA can compound year-after-year on a tax-deferred basis and can grow that way until required minimum distributions must start when an account holder turns 70½, helping a small nest egg to grow into a large one.

The hypothetical chart shown below captures the potential power of this compounding, illustrating the growth trajectory of $100,000 invested in a tax-deferred account compared to a taxable account where the account holder makes annual contributions of $5,500.

While investment returns will vary and this type of growth is not guaranteed, making your 2017 IRA contributions is an easy tool to use to help you meet your retirement goals.

This Blog does not provide investment, tax, or legal advice nor does it evaluate, recommend or endorse any advisory firm or investment vehicle. Investments are not FDIC insured and are subject to risk, including the loss of principal.

PENSCO Trust Company performs the duties of an independent custodian of assets for self-directed individual and business retirement accounts and does not provide investment advice, sell investments or offer any tax or legal advice. Clients or potential clients are advised to perform their own due diligence in choosing any investment opportunity as well as selecting any professional to assist them with an investment opportunity. Alternative investments are not FDIC insured and are subject to risk, including loss of principal. Other than the Opus Affiliates, PENSCO is not affiliated with any financial professional, investment, investment sponsor, or investment, tax or legal advisor.