The IRS recently announced the new cost of living adjustments to the annual limits on retirement contributions. These limits impact the amount of money you can contribute to specific retirement plans. This can have an effect on how you formulate your estate and retirement planning in Tennessee.
The new 2016 annual limits for contributions to a 401(k), 403(b), most 457 plans and the federal government Thrift Savings Plan remains the same as the prior year at $18,000.00. The helpful annual catchup contribution to these plans, available for those over 50, stands at $6,000.00 for 2016.
The limit for contributions to an IRA (Roth or normal IRA) is not changed for 2016. It remains at the $5,500.00 level. For those that take advantage of the Roth IRA, the AGI (Adjusted Gross Income) phase-out level for the ability to contribute was adjusted up for 2016. The phase-out now begins at $184,000.00 for married couples filing jointly and $117,000.00 for singles and heads of household. Once you hit this level, your ability to contribute starts to phase out.
The beginning of a new year is always a great time to update your beneficiary designations on your retirement accounts. In Tennessee, if you have a proper beneficiary designation, these accounts can pass outside of probate. If you do not have any designation or if you name your estate as the beneficiary, then this money will pass through your estate in the probate process. Life circumstances sometimes change and this is an important thing to remember so your beneficiary designations match up with your intentions that are expressed in your Will.
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