401k and Retirement Plan Limits for the Tax Year 2017

401k and Retirement Plan Limits for the Tax Year 2017

On October 27, 2016, the Internal Revenue Service announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2017.

Highlights of Limitations That Remain Unchanged From 2016

  • The contribution limit for employees who participate in 401k, 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $18,000.
  • The catch-up contribution limit for employees aged 50 and over who participate in 401k, 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $6,000.
  • The limit on annual contributions to an IRA remains unchanged at $5,500. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

Chart of Select Limits
401k Plan Limits for Year 2017 2016 2015 2014 2013 2012 2011
401k Elective Deferrals $18,000 $18,000 $18,000 $17,500 $17,500 $17,000 $16,500
Annual Defined Contribution Limit $54,000 $53,000 $53,000 $52,000 $51,000 $50,000 $49,000
Annual Compensation Limit $270,000 $265,000 $265,000 $260,000 $255,000 $250,000 $245,000
Catch-Up Contribution Limit $6,000 $6,000 $6,000 $5,500 $5,500 $5,500 $5,500
Highly Compensated Employees $120,000 $120,000 $120,000 $115,000 $115,000 $115,000 $110,000
 
Non-401k Related Limits
403(b)/457 Elective Deferrals $18,000 $18,000 $18,000 $17,500 $17,500 $17,000 $16,500
SIMPLE Employee Deferrals $12,500 $12,500 $12,500 $12,000 $12,000 $11,500 $11,500
SIMPLE Catch-Up Deferral $3,000 $3,000 $3,000 $2,500 $2,500 $2,500 $2,500
SEP Minimum Compensation $600 $600 $600 $550 $550 $550 $550
SEP Annual Compensation Limit $270,000 $265,000 $265,000 $260,000 $255,000 $250,000 $245,000
Social Security Wage Base $127,200 $118,500 $118,500 $117,000 $113,700 $110,100 $106,800

Traditional IRA Contribution Limits 2011/2012

Here are the contribution limits for Traditional IRA for 2011/2012


Year Maximum Contribution

(if under age 50)

Maximum Contribution

(if over age 50)

Contribution Deadline
2011 $5,000 $6,000 04/17/2012
2012 $5,000 $6,000 04/15/2013

Traditional/Roth IRA Contribution Limits

Here are the contribution limits for Traditional and Roth IRAs for 2008/2009

Traditional IRA and
Roth IRA Contribution Limits
Upto Age 50 50+ catchup
2008 $5,000 $5,000
2009 $6,000 $6,000

Can you take penalty-free withdrawals from your IRA?

Here are some circumstances under which the IRS will waive the early-distribution penalty for withdrawing from your IRA.

 

  • Un-reimbursed medical expensesIf you do not have health insurance or your medical expenses are more than your insurance will cover for the year, you may be able to take penalty-free distributions from your IRA to cover these expenses. Keep in mind, that only the difference between these expenses and 7.5% of your adjusted gross income is eligible for this exception.
  • Medical insuranceIf you are unemployed, you may take penalty-free distributions from your IRA to pay for your medical insurance. Certain conditions apply, so ask you tax professional for more detail.
  • If you are disabledIf a physician determines that, because of an indefinete mental or physical disability, you are unable to engage in any gainful employment, you are allowed to take penalty-free distributions from your IRA.
  • Higher education expensesExpenses for higher education for you, your spouse or children or grandchildren of you or your spouse may be paid for by penalty-free distributions from your IRA. Consult with your tax professional to determine if your expenses qualify as higher-education expenses.
  • Inherited IRA assetsIf you are the beneficiary of a deceased person’s IRA, amounts you distribute from the inherited IRA are not subjected to early-distribution penalties. Check with your IRA custodian/trustee regarding the documentation required for processing the transaction.
  • First time home ownerThe IRS allows you a penalty-free distribution of up to $10,000, including closing costs, if you are purchasing, building or re-building your first home. The IRS considers your home as a first-time home if you have not owned a home for the past two years. This $10,000 is a lifetime limit. An additional $10,000 is allowed for your spouse.

2008 IRA Contribution

Beginning Jan 1, 2008, you can make your 2008 contribution.  For tax year 2008, you can contribute up to $5,000 of earned income to your IRA ($6,000 if you will be age 50 or older in 2008).