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Retirement By the Numbers
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Retirement By the Numbers: Employer Plans, IRAs and the Saver's Credit

Saving Opportunities Remain the Same Across Retirement Plans for 2016

Both IRA contribution levels and contribution limits to employer-sponsored programs are subject to cost of living adjustments (COLAs). IRA contribution levels remained the same from 2015 to 2016. The contribution levels for 401(k)s and other employer-sponsored programs also remained the same for 2016.

The allowable adjusted gross income (AGI) parameters for IRAs did increase for 2016. Income thresholds for 2016 also increased under the Retirement Savings Contributions Credit, commonly known as the Saver's Credit, which is a nonrefundable tax credit that allows lower- and middle-income retirement plan participants to use elective contributions to reduce their federal income tax.

Employer-sponsored Programs
Retirement Vehicle Maximum 2016
Employee Contribution*
Catch-up Contributions
401(k), 457 and 403(b) plans $18,000 — pre-tax dollars
(unchanged from 2015)
$6,000
(unchanged from 2015)
SIMPLE plans $12,500 — pre-tax dollars
(unchanged from 2015)
$3,000
(unchanged from 2015)
SARSEP**
(Salary Reduction SEP)
$18,000 — pre-tax dollars
(unchanged from 2015)
$6,000
(unchanged from 2015)

IRAs***
Retirement Vehicle 2016 Maximum Contribution Limits* Catch-up Contributions Adjusted Gross
Income (AGI) Restrictions
Traditional Deductible IRA $5,500
(same as 2015)
$1,000
(same for 2015)

For active participants in employer provided plan:
Single filers: under $61,000 phasing out completely at $71,000 (same as for 2015)

Married, filing jointly: under $98,000 phasing out completely at $118,000 (same as for 2015)

Traditional Nondeductible IRA $5,500
(same as 2015)
$1,000
(same for 2015)
N/A
Roth IRA Nondeductible $5,500
(same as 2015)
$1,000
(same for 2015)

Single filers: under $117,000 phasing out completely at $132,000 (under $116,000 phasing out completely at $131,000 for 2015)

Married, filing jointly: under $184,000 phasing out completely at $194,000 (under $183,000 phasing out completely at $193,000 for 2015)

*Subject to COLAs.

**SARSEPs must have been established prior to January 1, 1997. The maximum contribution and catch-up amounts are the same as for 401(k), 457 and 403(b) plans.

***Individuals have generally until the tax filing deadline (April 18, 2016, except Maine and Massachusetts which has a deadline of April 19, 2016), to make contributions to their IRAs for 2015.

Retirement Savings Contributions Credit****
Retirement Vehicle 2016 Maximum Credit Adjusted Gross
Income (AGI) Restrictions
IRAs, Roth IRAs, SIMPLE Plans, 401(k)s and other qualified retirement plans

$1,000 for single filers

$2,000 for joint filers

Single filers: $30,750 or less ($30,500 for 2015)

Head of household filers: $46,125 or less ($45,750 for 2015)

Married, filing jointly: $61,500 or less ($61,000 for 2015)

****Depending on AGI, the Retirement Savings Contribution Credit, commonly referred to as the Saver's Credit, provides a credit ranging from 10% to 50% with lower income taxpayers being eligible for a higher credit. For example, a married taxpayer filing jointly with an AGI of less than $37,000 making a $2,000 retirement plan contribution in 2016 could be eligible for a 50% credit, or $1,000. By contrast, if that same taxpayer had an AGI between $37,000 and $39,999, would be eligible for a 20% credit, or $400; an AGI between $40,000 and $61,499 would make that same taxpayer eligible for a 10% credit, or $200.

SOURCE: Wolters Kluwer, 2016
Permission for use granted.

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