The Internal Revenue Service (IRS) announced the cost-of-living adjustments for pension plans and other retirement-related items for 2016. Some of the highlights from the announcement include the following:
- For Roth Individual Retirement Arrangements (IRAs), the adjusted gross income (AGI) phase-out range increased from $116,000 – $131,000 to $117,000 – $132,000 for singles and heads of households and increased from $183,000 – $193,000 to $184,000 – $194,000 for married couples filing jointly.
- The phase out ranges for the deduction for an individual making contributions toward a Traditional IRA remain unchanged: $61,000 – $71,000 for singles and heads of households; $98,000 – $118,000 for married couples filing jointly if the spouse who makes the IRA contribution is covered by a workplace retirement plan; $0 – $10,000 for a married individual filing a separate return who is covered by a workplace retirement plan.
- If an individual contributing to an IRA is not covered by a workplace retirement plan and is married to someone who is covered, then the deduction for the contribution is phased out if the couple’s income is between $184,000 – $194,000. This range increased from $183,000 – $193,000.
- The limit on the annual contributions to an IRA remains unchanged at $5,500, and the limit on the additional catch-up contribution for individuals 50 and over remains unchanged at $1,000.