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The IRS
recently announced the new cost of living adjustments to the annual limits
on retirement contributions. These
limits impact the amount of money you can contribute to specific retirement
plans. This can have an effect on how
you formulate your estate and retirement planning in Tennessee.
The new 2016 annual limits for contributions
to a 401(k), 403(b), most 457 plans and the federal government Thrift Savings
Plan remains the same as the prior year at $18,000.00. The helpful annual catchup contribution to
these plans, available for those over 50, stands at $6,000.00 for 2016.
The limit for contributions to an IRA (Roth
or normal IRA) is not changed for 2016.
It remains at the $5,500.00 level.
For those that take advantage of the Roth IRA, the AGI (Adjusted Gross
Income) phase-out level for the ability to contribute was adjusted up for 2016. The phase-out now begins at $184,000.00 for
married couples filing jointly and $117,000.00 for singles and heads of
household. Once you hit this level, your
ability to contribute starts to phase out.
The beginning of a new year is always a great
time to update your beneficiary designations on your retirement accounts. In Tennessee, if you have a proper
beneficiary designation, these accounts can pass outside of probate. If you do not have any designation or if you
name your estate as the beneficiary, then this money will pass through your
estate in the probate process. Life
circumstances sometimes change and this is an important thing to remember so
your beneficiary designations match up with your intentions that are expressed
in your Will.
Follow me on Twitter at @jasonalee for updates from the Tennessee
Wills and Estates blog.
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