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Key Retirement and Tax Numbers for 2017 (Jan)

Every year, the Internal Revenue Service announces cost-of-living adjustments that affect contribution limits for retirement plans, thresholds for deductions and credits, and standard deduction and personal exemption amounts. Here are a few of the key adjustments for 2017.

Retirement plans

  • Employees who participate in 401(k), 403(b), and most 457 plans can defer up to $18,000 in compensation in 2017 (the same as in 2016); employees age 50 and older can defer up to an additional $6,000 in 2017 (the same as in 2016).
  • Employees participating in a SIMPLE retirement plan can defer up to $12,500 in 2017 (the same as in 2016), and employees age 50 and older will be able to defer up to an additional $3,000 in 2017 (the same as in 2016).


The limit on annual contributions to an IRA remains unchanged at $5,500 in 2017, with individuals age 50 and older able to contribute an additional $1,000. For individuals who are covered by a workplace retirement plan, the deduction for contributions to a traditional IRA is phased out for the following modified adjusted gross income (AGI) ranges:

2016 2017
Single/head of household (HOH) $61,000 – $71,000 $62,000 – $72,000
Married filing jointly (MFJ) $98,000 – $118,000 $99,000 – $119,000
Married filing separately (MFS) $0 – $10,000 $0 – $10,000

Note:  The 2017 phaseout range is $186,000 – $196,000 (up from $184,000 – $194,000 in 2016) when the individual making the IRA contribution is not covered by a workplace retirement plan but is filing jointly with a spouse who is covered

The modified AGI phaseout ranges for individuals making contributions to a Roth IRA are:

2016 2017
Single/HOH $117,000 – $132,000 $118,000 – $133,000
MFJ $184,000 – $194,000 $186,000 – $196,000
MFS $0 – $10,000 $0 – $10,000

Estate and gift tax

  • The annual gift tax exclusion remains at $14,000.
  • The gift and estate tax basic exclusion amount for 2017 is $5,490,000, up from $5,450,000 in 2016.

Personal exemption

The personal exemption amount remains at $4,050. For 2017, personal exemptions begin to phase out once AGI exceeds $261,500 (single), $287,650 (HOH), $313,800 (MFJ), or $156,900 (MFS).

Note:  These same AGI thresholds apply in determining if itemized deductions may be limited. The corresponding 2016 threshold amounts were $259,400 (single), $285,350 (HOH), $311,300 (MFJ), and $155,650 (MFS).

Standard deduction

These amounts have been adjusted as follows:

2016 2017
Single $6,300 $6,350
HOH $9,300 $9,350
MFJ $12,600 $12,700
MFS $6,300 $6,350

Note: The 2016 and 2017 additional standard deduction amount (age 65 or older, or blind) is $1,550 for single/HOH or $1,250 for all other filing statuses. Special rules apply if you can be claimed as a dependent by another taxpayer.

Alternative minimum tax (AMT)

AMT amounts have been adjusted as follows:

2016 2017
Maximum AMT exemption amount
Single/HOH $53,900 $54,300
MFJ $83,800 $84,500
MFS $41,900 $42,250
Exemption phaseout threshold
Single/HOH $119,700 $120,700
MFJ $159,700 $160,900
MFS $79,850 $80,450
26% on AMTI* up to this amount, 28% on AMTI above this amount
MFS $93,150 $93,900
All others $186,300 $187,800

New Video Looks at Soaring Health-Care Costs

Major advances in medical treatment, an aging population, and the Affordable Care Act have all contributed to changes in the U.S. health-care landscape over the last decade. In 2015, total U.S. health-care spending increased 5.5% to reach $3.2 trillion. While cost increases have moderated after averaging nearly 8% annually over the previous two decades, they are still outpacing overall inflation. Find out why some economists believe uncontained health costs could pose a threat to broader economic growth by logging into Forefield.com. We’ll continue to pass along timely, relevant information–providing fresh and interesting ways for you to engage and motivate your clients.

New Overtime Rules Take Effect in December

On December 1, 2016, about 4.2 million workers who were previously classified as “exempt” could become eligible for overtime pay due to modifications to the Fair Labor Standards Act (FLSA), and many small businesses have been scrambling to comply with the new rules. Following is a brief summary of why the changes were enacted, and what they may mean for both workers and employers.

In May 2016, President Obama and Secretary of Labor Thomas Perez announced major changes to the FLSA that are intended to improve the situations of lower-salaried workers who typically work more than 40 hours per week, such as restaurant and retail managers. Because of their long hours and relatively low salaries, such employees can potentially earn less, on an hourly basis, than the associates they manage. The Department of Labor (DOL) has said, “This long-awaited update will result in a meaningful boost to many workers’ wallets.” However, the new rules may complicate matters for small businesses struggling to maintain appropriate staffing levels while trying to contain labor costs.

Specifically, the new rules increase the minimum salary that an executive, administrative, and professional employee must earn to be considered “exempt” from overtime pay. On December 1, the annual salary threshold rises to $47,476 ($913 per week), more than double the previous amount of $23,660 ($455 per week) established in 2004. This means that employers are considering several options:

  • Reclassify all employees making less than $47,476 per year as non-exempt, and therefore eligible to receive time and a half overtime pay when their hours exceed 40 per week.
  • Ensure that the salary for all executive, administrative, and professional employees is at least $47,476 per year.
  • Ensure that all executive, administrative, and professional employees who make less than $47,476 annually work no more than 40 hours per week.

One caveat is that the rule also allows employers to use nondiscretionary bonuses and incentive compensation (including commissions) to satisfy up to 10% of the new threshold salary requirement, as long as those payments are made on at least a quarterly basis. Also note that the new salary threshold will be adjusted every three years, beginning in 2020, based on wage growth, so affected employee salaries will need to keep pace with these adjustments.

While the rules are intended to improve employee situations by helping them secure either higher paychecks or fewer hours at work — and may indeed achieve that goal for many American workers — the benefits may barely be noticed by employees whose salaries need to rise by small amounts to meet the new threshold. Employers, by contrast, are weighing the requirements of having to track salaried employee hours and potentially make overtime payments against the costs of lifting salaries to meet the threshold.

For more specifics and information, please visit the Department of Labor website.


October 17 to 23, 2016 Is National Estate Planning Awareness Week

The third week in October has been designated as National Estate Planning Awareness Week. Estate planning is a vital component of every financial plan, regardless of the size of the estate. Unfortunately, it’s also an area that is commonly overlooked. This often results in wasted dollars and emotional hardship that could otherwise be minimized with proper advance planning and action. We have a concept video on key estate planning documents as well as articles that can help you motivate clients to create or review their estate plans. Composer subscribers, look for our National Estate Planning Awareness Week greeting card, which can be personalized with your own title and message.

We’ll continue to pass along timely, relevant information–providing fresh and interesting ways for you to engage and motivate your clients.

Millennial Resource Center

We’ve just launched a new Millennial Resource Center as part of our Advisor product. Born between 1981 and 1997, millennials are the largest living generation in the United States. They will soon enter their prime earning and spending years, and will need help with the unique financial challenges they face.

Our Resource Center materials can help millennials understand basic financial concepts and develop money management skills to help improve their financial futures.

The new Millennial Resource Center joins our seven other Resource Centers, all designed to help you more easily provide targeted information to your clients.

We encourage you to submit suggestions for new Resource Centers and additional topics you would like to see.

Retiree Confidence on the Rise, Survey Finds

While retirement confidence among U.S. workers appears to be stabilizing, confidence among today’sretirees continues to climb, finds the Employee Benefit Research Institute (EBRI) in its latest Retirement Confidence Survey.

Workers who said they were “very confident” in their ability to afford a comfortable retirement rose from 13% in 2013 to 22% last year. In 2016, that percentage leveled off at 21%. However, the percentage of retirees who are “very confident” continued to rise in 2016 to 39%, up from 18% in 2013.

Historically, retiree confidence has exceeded worker confidence, said the report.

Worker perceptions vs. retiree realities

Each year, the study reveals findings that compare worker expectations and perceptions with the actual experiences of current retirees. For example:

  • While 78% of workers are at least “somewhat confident” that they will have enough money to afford basic expenses in retirement, an even higher percentage (84%) of current retirees feel that way. An even sharper contrast emerges when considering the affordability of medical expenses. Thirty-eight percent of workers say they are “not too” or “not at all confident” in their prospects for funding medical care, while just 21% of retirees share that level of concern.
  • The age at which workers expect to retire has crept upward through the years, while the actual retirement age for retired respondents has changed very little. In 1991, just 11% of workers said they expected to retire after age 65. In 2016, the percentage increased to 37%. By comparison, the actual percentage of retirees who retired after age 65 was 8% in 1991 and rose to 15% in 2016. The median age at which retirees said they retired held steady at age 62 throughout the 25-year period.
  • Only 8% of today’s workers said they plan to retire before age 60, yet 36% of today’s retirees left the workforce before reaching that age. Why the difference? The study’s authors said that each year they discover a sizable percentage of retirees who retire earlier than planned–46% in 2016. Reasons cited include health problems or disability (55%), changes at their company such as downsizing or closure(24%), and having to care for a family member (17%).

Despite these findings, workers can take heart knowing that today’s retirees feel more confident than in past years, and in knowing that the years ahead offer time to modify their retirement planning strategies if necessary.

About the survey

The 26th annual Retirement Confidence Survey was cosponsored by EBRI, a private, nonprofit,nonpartisan public policy research organization that focuses on health, savings, retirement, and economic security issues; and Greenwald & Associates, a Washington, DC-based market research firm. The survey was conducted in January and February 2016 through 20-minute telephone interviews with 1,505 people, including 1,000 workers and 505 retirees. Full results can be viewed at ebri.org.

April 11-15: National Retirement Planning Week

National Retirement Planning Week, April 11-15, is the perfect time to advise your clients on a variety of retirement planning issues. We offer several concept pieces, presentations, and seminars that you may find useful in communicating with your clients and prospects during National Retirement Planning Week. Log in to forefied.com to review our content including: Saving for Retirement, Women and Retirement Planning, Basic Retirement Planning, and our Retirement Basics Seminar. And don’t forget our Retirement Plan Participant Resource Center.