Here are some of the important ways retirement benefits will change in 2016.
IRA and 401(k) Limits – The 2016 contribution limits for 2016 for IRAs (Traditional pre-tax of after-tax Roth IRAs) increases to $18,000 with a $6,000 catch-up contribution for individuals aged 50 and over.
Saver’s credit. The adjusted gross income (AGI) limit increases to $30,750 for individuals and to $61,500 for married couples. This tax credit is available to low and moderate income families that save for retirement. It can be worth 10%-50% of your retirement contribution up to $2,000 for individuals and $4,000 for couples.
myRA – New in 2015, myRA is designed for individuals that workers that don’t have access to a retirement savings plan at their place of employment or lack other options to save. Individuals can contribute to a new government-sponsored retirement plan that has no fees and is guaranteed by the government never to lose value. However, there is only one investment option (a Treasury savings bond with a variable interest rate). The savings bond interest is not taxed while in the account and won’t be taxed at all if you leave it in the account until after age 59 1/2. Individuals who earn less than $131,000 and couples that earn less than $193,000 are eligible to contribute up to $5,500 per year, or $6,500 if they are age 50 or older. However, once the account balance grows to $15,000, or the account turns 30 years old, the money will be transferred to a private sector Roth IRA.
Claiming Social Security twice. Some married individuals who are 66 or older have been claiming Social Security benefits twice. They first collect spousal payments and then later switch to payments based on their own work, which will then be higher because they claimed it at an older age. However, workers who turn 62 in 2016 or later will not be able to claim both types of payments, but must select one or the other
Suspending Social Security suspended payment rules. Social Security beneficiaries who don’t need the money are allowed to suspend their payments and then resume higher payments at a later date due to the accumulation of delayed retirement credits. In the past, spouses and dependent children could claim payments based on your work record while your payments were suspended and continued to grow. However, beginning in May 2016, suspending your payments also suspends payments for anyone else receiving payments based on your work.
Higher Medicare Part B premiums for some people. Most Social Security recipients will continue to pay the same $104.90 Medicare Part B premium in 2016. Medicare Part B premiums are prevented by law from climbing faster than Social Security payments for most existing beneficiaries. There will be no Social Security cost-of-living adjustment in 2016. Newly-enrolled applicants in Medicare Part B in 2016 will pay a slightly higher Medicare Part B premium of $121.80 per month. This increase was a last-minute fix in the 2016 budget bill that prevented a much larger premium increase to $159.30 for new beneficiaries. As in previous years, high income beneficiaries will pay higher Medicare Part B premiums. The Medicare Part B deductible will increase from $147 in 2015 to $166 in 2016.BACK TO LIST