Key Financial Numbers for 2017

Here are some key financial-planning numbers as we head into the new year.

Retirement plan contribution limits

Contribution limits for 401(k)s, 403(b)s, and 457 plans will remain at $18,000- the same for 2017 as they were in 2016. Contribution limits for those age 50 or older will be $24,000. The total allowable contribution to a 401(k)—including employee contributions (pretax, Roth, and after-tax) as well as employer’s contributions—is increasing to $54,000 for 2017.

IRA contribution limits

The contribution limit to IRAs (both traditional and Roth) will remain at $5,500 for 2017. Contribution limits for those age 50 or older will be $6,500.

The income limits to be able to deduct a traditional IRA contribution are increasing: individual filer’s income is limited to $72,000. For married couples filing jointly in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, traditional IRA contributions are deductible if their income between $99,000; and $119,000.

Income limits for making Roth contributions are increasing to between $118,000 and $133,000 for single filers, and between $186,000 and $196,000 for married filers. Higher income investors can still take advantage of a “backdoor” Roth IRA. Please contact us for more information about these.

Social Security

Social Security recipients will be receiving a 0.3% cost of living adjustment in 2017. For more about the increase, see our article, “Social Security and Medicare: Making Sense of the 2017 Increases.”

The amount of workers’ income that is subject to Social Security tax is increasing to $127,200.

Health savings accounts

The limits for health savings accounts will remain about the same for 2017. Those with single coverage can contribute $3,400 to an HSA in 2017, and those with family coverage can contribute $6,750. Investors age 55 and older can make an additional $1,000 catch-up contribution.

College education savings

Contributions to 529 college savings plans vary, but generally the gift tax limits apply. Each individual can contribute up to $14,000 a year to a 529 account for another individual without having it count toward gift tax limits and without having to file a gift tax return. However, investors who would like to make a large upfront contribution to a 529 can “front load” the account for up to 5 years worth of contributions, and though they would have to file a gift tax return, the contribution would not count toward their gift tax limits.

Education IRAs, also called Coverdell Education Savings Accounts have much lower contribution limits; for 2017 the limit is $2,000 per beneficiary. Additionally, income limits apply; for 2017, single filers income is limited to between $95,000 and $110,000. Married couples filing jointly can contribute to a Coverdell if their income is between $190,000 and $220,000.

Estate and gift tax

The annual gift-tax exclusion for 2017 remains at $14,000. The amount of assets that are exempt from the estate and gift tax is increasing to $5,490,000. Married couples can escape gift/estate taxes if their total assets and lifetime gifts are no more than $10,980,000.

Information for this article was derived from a Morningstar article written by Christine Benz.
Christine Benz is Morningstar’s director of personal finance and author of 30-Minute Money Solutions.