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New 2016 IRS Contribution Limits for 401k, 403(b) and IRA Retirement Accounts

Posted on Jan 22 2016 5:28PM by Attorney, Jason A. Lee

The IRS recently announced the new cost of living adjustments to the annual limits on retirement contributions.  These limits impact the amount of money you can contribute to specific retirement plans.  This can have an effect on how you formulate your estate and retirement planning in Tennessee.

 

The new 2016 annual limits for contributions to a 401(k), 403(b), most 457 plans and the federal government Thrift Savings Plan remains the same as the prior year at $18,000.00.  The helpful annual catchup contribution to these plans, available for those over 50, stands at $6,000.00 for 2016. 

 

The limit for contributions to an IRA (Roth or normal IRA) is not changed for 2016.  It remains at the $5,500.00 level.  For those that take advantage of the Roth IRA, the AGI (Adjusted Gross Income) phase-out level for the ability to contribute was adjusted up for 2016.  The phase-out now begins at $184,000.00 for married couples filing jointly and $117,000.00 for singles and heads of household.  Once you hit this level, your ability to contribute starts to phase out.

 

The beginning of a new year is always a great time to update your beneficiary designations on your retirement accounts.  In Tennessee, if you have a proper beneficiary designation, these accounts can pass outside of probate.  If you do not have any designation or if you name your estate as the beneficiary, then this money will pass through your estate in the probate process.  Life circumstances sometimes change and this is an important thing to remember so your beneficiary designations match up with your intentions that are expressed in your Will.

 

Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
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TAGS: Retirement plans - 401k etc. Comments [0]
  
 

New IRS 2016 Limits for Federal Estate and Gift Tax Exemptions; Tennessee Inheritance Tax Abolished in 2016

Posted on Jan 3 2016 4:35PM by Attorney, Jason A. Lee

The IRS recently introduced new cost of living adjustments to the lifetime federal estate and gift tax exemption.  The new federal estate and gift tax exemption will be $5.45 million dollars in 2016.  This is an increase from the prior exemption of $5.43 million for 2015.  This is therefore an increase of $20,000.00 that can be passed on by gift or in your estate, tax free starting in 2015. 

 

Unfortunately, the annual tax free gift exclusion amount stays at the same level at a total of $14,000.00.  This is the annual amount of gifts that can be given to an individual without counting toward the lifetime consolidated exemption of $5.45 million for 2016.  As a result, each year you can give up to $14,000.00 to an individual using the annual gift tax exclusion.  These gifts will not count towards your lifetime exemption amount.

 

As I have stated before on this blog, estate taxes are becoming less relevant to the vast majority of Americans due to the “permanent” fix that was provided by the federal government a few years ago.  The estate tax simply does not come into play for most people.  Additionally, the Tennessee inheritance tax is now abolished in Tennessee for any person who dies in 2016 or later.  It simply does not exist any longer. 

 

Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
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TAGS: Tennessee Inheritance Tax, Taxes, Federal Estate Tax Comments [0]
  
 
Author

Jason A. Lee is a Member of Burrow Lee, PLLC. Contact Jason at 615-540-1004 or jlee@burrowlee.com for an initial consultation on wills estate planning and probate issues.

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Tennessee Wills and Estates Blog
Jason A. Lee, Member of Burrow Lee, PLLC
611 Commerce Street, Suite 2603
Nashville, TN 37203
Phone: 615-540-1004
E-mail: jlee@burrowlee.com

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