What's new (and what's not) in 2016
It’s that time again! Take a look at the new tax rules for IRAs and see what’s changed.
Rollovers: There is still no limit on the number of direct transfers you can make between IRAs. But as of January 1, 2015, a taxpayer may make only one tax-free indirect IRA rollover in 12 months. (An indirect rollover is one in which distributions are taken out and then deposited again within 60 days.) Under the
old rule, this 12-month limit applied to each IRA, but now it applies to each taxpayer – no matter how many IRAs a person may own.
Annual Contributions: As in 2015, the total contributions to all of your traditional and Roth IRAs cannot be more than $5,500 ($6,500 if you’re age 50 or older). If your taxable compensation for the year was less than this limit, then your taxable compensation is also the dollar amount of your annual contribution limit. Be careful, because excess IRA contributions are taxed.
Traditional IRA Contributions: The income levels for Traditional IRA deductible contributions have increased very slightly in 2016. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $184,000 and $194,000, up from $183,000 and $193,000.
Roth IRA Contributions: The income levels for Roth IRA contributions have changed slightly in 2016. Taxpayers who are married and filing jointly with a modified adjusted gross income below $184,000 can contribute up to the full limit (that’s an increase from $183,000 in 2015).
Deposit for 2015 up until April 18th: The deadline for maximizing IRA contributions isn’t New Year’s Day. You have through April 18th of this year to contribute toward your 2015 IRA maximum.
To schedule a free personal consultation with a Horizon advisor, call 888-873-2640 or visit your nearest Horizon location.