December 14, 2017
Written by Complete Payroll
The Internal Revenue Service (IRS) just increased the401(k)contribution limit for 2018. In 2018, investors will be able to contribute up to $18,500 of their paycheck to their workplace retirement plan. This increase is $500 above the previous limit. It's also the IRS's first increase since 2015. But that only includes what employees contribute to employer-sponsored plans like 401(k)s, 403(b)s, most 457 plans and the Thrift Savings Plan (for federal employees). The maximum contribution from all sources will also be increasing (by $1,000 from last year) to $55,000. Contribution limits toRothor traditional individual retirement accounts are staying the same at $5,500.However, income phase-out ranges are coming. If an employee and their spouse are not covered by a retirement plan at work, they're allowed todeduct from their taxes what they contribute to a traditional IRA. (Learn more about the IRA deduction limits from the IRS website here.) That being said, if an employee or their spouse has a workplace retirement plan (or access to one), the amount they can deduct from their taxes phases out - based on their income and filing status. Here are the new phase-out ranges: Income also determines whether or not an employee is eligible to contribute to a Roth IRA. The new phase-out ranges for 2018 are: The catch-up contribution limits for those 50 and older have not changed. It’s still $6,000 for employer-sponsored plans and $1,000 for IRAs.Maximum contribution from all sources also increasing
IRAs and income phase-outs
DISCLAIMER: The information provided herein does not constitute the provision of legal advice, tax advice, accounting services or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional legal, tax, accounting, or other professional advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation and for your particular state(s) of operation.
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