FAQ: 2017 Limits in Financial Planning

Jeanne Sullivan |

This is the time of year when many may be spending time with family and/or friends while enjoying the holiday season. It's also the time when people typically make New Year resolutions – often centered around physical health or financial health.

These are some Frequently Asked Questions I get for those thinking about their finances.   Of course there is more to financial planning and investment advisory services than these limits:

Q: What is the max I can contribute to my 401(k), 403(b), 457 plan in 2017?
A: There is no change in 2017. The elective deferral amount remains constant at $18,000 and if you are 50 years old or older you can defer an additional $6,000 for a total of $24,000

Q: What is the maximum I can contribute to my IRA or Roth IRA in 2017?
A: Again, no change in 2017. You can defer $5,500 with a $1,000 catch up provision if you are 50 years old or older. Be aware that direct Roth IRA contributions are phased out depending upon your tax filing status. The limits in 2017 for the phase outs did increase slightly. If you cannot contribute directly to a Roth consider “back door” Roth strategies such as conversions.

Q: Will I still get a bump-up in my pay when I exceed the Social Security wage base?
A: Okay, this really isn’t a FAQ; however, employees are in for a surprise on this one in 2017. In 2016, your earnings up to $118,500 were subject to social security tax. Earnings above this limit escape such taxation.
In 2017 the Social Security wage base is $127,200 or a 7.34% increase! On an absolute basis this means the maximum taxable earing increase of $8,700 equals an additional tax of $539.40 in 2107. The OASDI tax rate is 6.2% for employees.

Q: What is the 2017 annual gift tax exclusion?
A: This has remained the same in 2014: $14,000. You don’t need to worry about filing gift tax returns for gifts under this limit.

Q: Where do I find more information like this?
A: Great, be engaged!  

The IRS website is a great resource at www.irs.gov.

The College for Financial Planning publishes an annual summary which can be found here: http://www.cffpinfo.com/download/annual_limits/2017_Annual_Limits.pdf

Download “Bloomberg BNA Quick Tax Reference” to your mobile device.

Contact us at Financially In Tune.