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Post Date:  10/26/2015
Last Updated:  10/26/2015

Summary
Cross References
- IR-2015-118, October 21, 2015
- IR-2015-119, October 21, 2015
- Rev. Proc. 2015-53

Pension Inflation Adjusted Amounts
The Internal Revenue Service recently announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2016. In general, the pension plan limitations will not change for 2016 because the increase in the cost-of-living index did not meet the statutory thresholds that trigger their adjust- ment. However, other limitations will change because the increase in the index did meet the statutory thresholds.

The highlights of limitations that changed from 2015 to 2016 include the following:
- For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income in 2016 is between $184,000 and $194,000, up from $183,000 and $193,000 in 2015.
- The AGI phaseout range for taxpayers making contributions to a Roth IRA is $184,000 to $194,000 for married couples filing jointly in 2016, up from $183,000 to $193,000 in 2015. For singles and heads of household, the income phaseout range for 2016 is $117,000 to $132,000, up from $116,000 to $131,000 for 2015.
- The AGI limit for the saver’s credit (also known as the Retirement Savings Contribution Credit) for low and moderate-income workers is $61,500 for married couples filing jointly in 2016, up from $61,000 in 2015; $46,125 for heads of household in 2016, up from $45,750 in 2015; and $30,750 for married individuals filing separately and for singles in 2016, up from $30,500 in 2015.

The highlights of limitations that remain unchanged from 2015 include the following:
- The elective deferral (contribution) limit for employees who participate in 401(k), 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 401(k), 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 individual retirement arrangement (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.
- The deduction for taxpayers making contributions to a traditional IRA is phased out for those who have modified adjusted gross incomes (AGI) within a certain range. For singles and heads of household who are covered by a workplace retirement plan, the income phaseout range remains unchanged at $61,000 to $71,000. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phaseout range remains unchanged at $98,000 to $118,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phaseout range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
- The AGI phaseout range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

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