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URL:  https://boards.fool.com/does-anyone-know-if-there-are-income-limits-that-31200214.aspx

Subject:  Re: 401k tax credits Date:  4/7/2014  10:50 PM
Author:  aj485 Number:  25209 of 26228

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
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