The Family Firm Blog

Tax updates for 2016

Posted by Stephen Daly on 1/13/16 12:00 AM
Stephen Daly

 

Qualified Charitable Distribution from IRAs made permanent.

The IRA Charitable Rollover provision allows individuals who have reached age 70½ to donate up to $100,000 to charitable organizations directly from their Individual Retirement Account (IRA), without treating the distribution as taxable income.

The Federal Estate Tax Exemption has increased slightly

The Federal Estate tax exemption has increased to $5.45 million from $5.43 million in 2016 and is slated to continue to increase at the rate of inflation.  Maryland’s estate tax exemption has also increased to $2 million and will increase each year until 2019 when it will match the Federal exemption amount.  Washington DC’s exemption remains unchanged at $1 million and Virginia continues to impose no estate tax.

Contribution limits on health savings accounts increased for family policies

Health savings accounts let people with high-deductible health plans set money aside on a pretax basis to cover the costs of their health care. For 2016, the maximum contribution for family policies will rise by $100 to $6,750. A catch-up contribution of $1,000 for those 55 or older will continue to apply.  The contribution limit for individual policies will remain at $3,350,

Contribution limits to qualified retirement plans and IRAs remain unchanged for 2016

The annual contribution cap remains at $18,000 for qualified retirement plans such as 401(k)s and 403(b)s.  Individuals over 50 may still make catch up contributions of $6,000 for a total annual contribution cap of $24,000.

The maximum annual contribution to IRAs and Roth IRAs also remains unchanged at $5,500 plus $1,000 catch up contributions for individuals 50 and over. 

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