Hoping to up your retirement savings next year? You won't get much help from the government.
The maximum amount of money you can sock away in your 401(k) in 2016 will be the same as this year: $18,000.
Each year, the limits are reviewed and sometimes increased. Last year the amount jumped by $500, but low inflation since then means it won't be going up next year, the IRS said Wednesday.
The contribution caps will also remain at $18,000 for other tax-deferred retirement accounts like the 403(b), most 457 accounts and the federal government's Thrift Savings Plan.
Contribution limits for IRAs will also remain unchanged, at $5,500.
But there are some small changes the IRS will make in 2016 that affect who can contribute to a Roth IRA and who can deduct contributions to an IRA from their taxable income.
Here's what you need to know.
401(k)s
Maximum contribution in 2016: $18,000
Maximum contribution if over 50: $24,000
IRAs
Maximum contribution in 2016: $5,500
Maximum contribution if over 50: $6,500
Can you deduct your contribution from your taxes?
-- If you don't have a retirement plan at work and you're under 70 ½, you can deduct the entire amount of your contribution.
-- If your spouse has a workplace plan, but you don't, and jointly earn under $184,000, then you can deduct the entire amount of your contribution.
-- You can deduct part of your contribution if you jointly earn up to $194,000.
If you have a workplace plan, you can deduct the entire amount of your contribution if you earn below $61,000 as a single, or below $98,000 for a couple. You can deduct part of your contribution if you earn below $71,000 as a single, or $118,000 for a couple.
Roth IRAs
Maximum contribution in 2016: $5,500
Maximum contribution if over 50: $6,500
You can only make the maximum contribution if...
-- You're single and earn less than $117,000 (Up from $116,000)
-- You're married and earn less than $184,000 (Up from $183,000)
You can't make any contribution at all if...
-- You're single and earn more than $132,000 (Up from $131,000)
-- You're married and earn more than $194,000 (Up from $193,000)
