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Here are some things to watch out for while budgeting for 2017.

Budgeting for the New Year

 

The new year is upon us – and it’s past time to start thinking about how you’re going to create and stick to your budget this year. There are a few changes coming to traditional programs like the health savings account and individual retirement accounts that you should be aware of as you’re creating your financial plan for 2017.

“Opening an HSA is a good option for those who have higher deductibles.”

HSA is mostly staying the same

Health savings accounts are special accounts designed for people with high deductibles to be able to set aside money for use in the event of a large medical expense. You can contribute money to the savings account each year and then deduct this amount from your taxes. There are a few changes occurring to the HSA in 2017 that consumers will need to know about, but because inflation adjustments have been minimal, there are mostly no changes to the requirements for HSAs or high-deductible health plans. The maximum annual out-of-pocket expenses remains unchanged, as does the minimum annual deductible for HDHPs.

While these changes are minimal, it’s still important to take note, since opening an HSA is a good option for those who have higher deductibles and thus risk having to pay greater fees in the event of a medical emergency. Especially in the wake of coming change to current health insurance laws, it’s critical for the common citizen to be armed with the right information.

3 IRA changes to watch for

Unlike the fairly minimal changes in HSAs, 401(k)s, individual retirement accounts and Roth IRAs are all going to undergo some shifts that may impact consumers in the long run.

1. Income limits for Traditional IRAs increasing
With a Traditional IRA, there are income limits that must be met in order to qualify for an upfront tax deduction. In 2017, those limits are set to rise for workers and couples where retirement plans are available from their employers. For instance, if you are married and filing jointly, you need to make between $99,000 and $119,000 per year in order to qualify, whereas in 2016 the limit was between $98,000 and $118,000.

2. Phase-out and exclusionary income limits for Roth increasing
These numbers are going up as well. For persons who are married and filing jointly, the range will increase by $2,000, whereas people who file by themselves will see it increase by $1,000.

3. Savers Credit income limits going up
For low-to-moderate income individuals and families, more of them will be able to take advantage of the Savers Credit, as the limit is going up by as much as $1,000 in 2017.

Changes to HSAs and IRAs are going to be important to pay attention to in the coming year.Changes to HSAs and IRAs are going to be important to pay attention to in the coming year.

Stay on budget

As these changes to HSAs and IRAs take effect, individuals will need to adjust their yearly budgets and make sure they’re in compliance with all the requirements. In addition, because so many of the income limits are going up for the retirement accounts, more people will be able to take advantage of this kind of savings account. It’s important to keep track of your finances and make sure you’re following all the important news regarding the changes.