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Don't Forget Year End 401k and IRA Contributions

By SHP Financial Blog | November 02 , 2016

Retirement gold egg.jpg

The end of 2016 is coming, and you need to make contributions to your 401(k), IRA or other workplace retirement plan by December 31 for the contributions to count for 2016. You still have until April 15, 2017 to make contributions to an IRA for 2016.

Low- and moderate-income workers can also take advantage of the Retirement Savings Contribution credit, which rewards them for making contributions to IRAs, 401(k)s, and similar retirement plans. The maximum credit is $1,000 per taxpayer, though other deductions and credits will reduce the benefit.

With this credit, eligible taxpayers deduct retirement contributions from their Adjusted Gross Income, as usual. On top of that, they can deduct an additional percentage of their contribution, as outlined in this chart:


 2016 Saver's Credit

 Credit Rate

 Married Filing Jointly

 Head of Household

 All Other Filers*

50% of your contribution

AGI not more than $37,000

AGI not more than $27,750

AGI not more than $18,500

20% of your contribution

$37,001 - $40,000

$27,751 - $30,000

$18,501 - $20,000

10% of your contribution

$40,001 - $61,500

$30,001 - $46,125

$20,001 - $30,750

0% of your  contribution

more than $61,500

more than $46,125

more than $30,750


*Single, married filing separately, or qualifying widow(er)

Though anyone over 18 can apply for the credit, full-time students and those claimed as dependents are not eligible.

Tip courtesy of IRS.gov[1]

 

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 [1] https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit

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