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The IRS
recently announced the new cost of living adjustments to the annual limits
on retirement contributions for 2017.
These limits reflect the amount of money you are able to contribute to certain
tax benefited retirement plans. This can
and should affect 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. This number has not changed over the past few
years. The annual catchup contribution allowance
for these plans, available to those over 50, stands at $6,000.00 for 2017. As a
result, someone over the age of 50 can contribute $24,000.00 annually to their
401k.
The limit for contributions to an IRA (Roth
or normal IRA) is also unchanged for 2017.
It remains at $5,500.00. For
those who take advantage of the Roth IRA, the AGI (Adjusted Gross Income)
phase-out level for the ability to contribute was adjusted up for 2017. The phase-out now begins at $186,000.00 for
married couples filing jointly and $118,000.00 for singles and heads of
household. Once you hit these levels, the
ability to contribute begins to phase out – and it is eventually completely
eliminated.
I highly recommend that you work to update
your beneficiary designations on your retirement and other accounts. In Tennessee, if you have a proper
beneficiary designation, these assets 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. Many
times the beneficiary designations do not math the Will and that is usually
unintended. Life circumstances change
and this is an important thing to remember so your beneficiary designations
match your intentions that are expressed in your Will.
Follow me on Twitter at @jasonalee
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