The IRS has also made changes to the income limits on tax deductions for these contributions, raising the limits so that the Modified Adjusted Gross Income (MAGI) covers a broader group.
In simpler terms, here’s what the changes mean for you:
- You can contribute more to your 401(k), 403(b) (you are probably familiar with this if you work for a non-profit 501(3)c charitable organization), 457(b) (government employees have probably heard of this one, or a Thrift Savings Plan (available to those who work in civil service or are a part of a uniformed service);
- You can add more to your Traditional IRA, as well as taking a tax deduction for those contributions. This is limited to the Traditional IRA, however, and does not apply to a Roth IRA;
- While you can’t contribute more, the income limit restrictions on Roth IRAs were changed. The income limits were raised by $2,000 for the MAGI, meaning that if you earned too much to be eligible last year, you may be eligible this tax year; and
- The Saver’s Credit income limit was also raised to where married couples can earn $1,500 more. The income limit for individuals was raised by $750 and the limit for those who file as the head of the household was raised by $1,125.
Miranda Marquit of InvestingAnswers has more over at the Business Insider.