Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (9) | Ignore Thread Prev | Next
Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 25242  
Subject: Re: 401k tax credits Date: 4/7/2014 10:50 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Does anyone know if there are income limits that, if exceeded, do not allow for tax credits on 401k contributions? I know there is for Traditional IRAs so I am just wondering about 401ks as well. This would be for married filing jointly. Thank you!

It depends on what you mean by 'tax credits' and 'income limits'. There is no Modified Adjusted Gross Income (MAGI) limit on 401(k) deductibility for 401(k) contributions like there is for IRA contributions. However, there are several other income/compensation limits associated with 401(k) plans that can affect the amount contributed and/or the tax treatment of those contributions.

For 2013, from the IRS announcement on Pension Plan limits http://www.irs.gov/uac/2013-Pension-Plan-Limitations

For the Saver's credit, which is what the term 'tax credits' brings to mind when used in relation to 401(k) contributions:

•The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $59,000 for married couples filing jointly, up from $57,500 in 2012; $44,250 for heads of household, up from $43,125; and $29,500 for married individuals filing separately and for singles, up from $28,750.

From the same announcement, the amount of the contribution that can be deducted:

•The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is increased from $17,000 to $17,500.
•The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $5,500.


From the same announcement, the highly compensated employee limit, which can limit the amount that can be contributed:

The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) remains unchanged at $115,000.

From the same announcement, the amount of compensation that can be considered for deductible contributions to a 401(k) plan:

The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C) and 408(k)(6)(D)(ii) is increased from $250,000 to $255,000.

If you were looking for limits for 2014 instead of 2013, here's the link to that announcement:

http://www.irs.gov/uac/IRS-Announces-2014-Pension-Plan-Limit...

AJ
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (9) | Ignore Thread Prev | Next

Announcements

Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Apple

Apple and Ninety Years Ago
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement