With the new year we all start thinking about income taxes and that dreaded April 15th deadline. For many, this is the time to make annual contributions to t IRAs for a tax deduction. Here are the limits and rules that apply.
The maximum annual contribution for an individual IRA is:
- $5,500 per person – OR –
- $6,500 per person if the individual is over the age of 50
The tax deduction depends on the individual’s level of income, as well as eligibility and contributions to a company qualified plan such as a 401k, 403b, or TSP for government employees, which includes the military.
I am amazed how I often I find that many people are not maxing out their 401k, 403b or TSP plan. Unlike an IRA, the tax deductible contribution limits are much higher and many times the employer gives a match up to a percentage of employees’ income. Limits for 401k, 403b and TSP plans are based on an individual’s income and age, and can be as high as $53,000 including the employer’s match. This can result in great tax savings.
We understand all the rules of different retirement plans and can help you understand them. We also offer a complimentary report called “27 Income Tax Strategies” that we have just updated to the latest rules for 2016/2017. To get your complimentary report call our office at 830 609-6986 or email us at firstname.lastname@example.org.
* For tax advice, please consult your tax professional.