IRA Contributions for 2016 and 2017: What You Need to Know

eric-vermulmPost written by Eric Vermulm, CFA | Chief Investment Officer | Stockman Wealth Management

The start of a new year is a great time to review your personal finances, particularly when it comes to your IRA.

This is the only time when you can make contributions for the coming year, the past year, or both. This flexibility is only available for a few months, so it’s important to do a portfolio check-up now.

If you’re already planning your 2017 contributions, this year’s limits will look a lot like last year’s levels.  Just like 2016, you will be able to contribute a maximum of $5,500 to your Traditional and Roth IRA accounts.

If you’re over 50, you can make a “catch-up” contribution of an additional 1,000 for a total deferral of $6,500. For anyone 70 ½ or older, while you’re no longer eligible to contribute to a Traditional IRA, Roth IRA contributions are accepted at any age.

If you didn’t contribute to an IRA in 2016, we have good news – there’s still time.  The Internal Revenue Service, being the kind organization that it is, allows savers to make contributions to their IRAs up to tax day of the following year.

investThat means you can still make a 2016 IRA contribution of up to $5,500 ($6,500 if you’re over 50) as long as it’s done before April 18, 2017.

To maximize the tax efficiency of your IRA, be sure to consult with your tax advisor. There are a number of limits on contributions and deductibility based on your age, income, or whether you have a retirement plan at work.  A good accountant can help you develop a strategy that maximizes your investment contribution while minimizing the taxes you pay to Uncle Sam.

For questions about starting or contributing to an IRA, please stop by any one of our branches.