Financial Tips

Financial Tips

Financial Tips

2017 Gift and Estate Tax Limits
(Updated: 02/07/2017)

Which of the choices below accurately represents the 2017 annual gift tax exclusion and the 2017 lifetime gift and estate tax exclusion?

  1. $14,000; $5,450,000
  2. $14,000; $5,490,000
  3. $15,000; $5,490,000
  4. $14,500; $5,490,000




Answer: B.

The annual gift tax exclusion for 2017 is $14,000, the same as in 2016. This means you can gift up to $14,000 to as many people as you like during the year without incurring gift taxes. The lifetime gift and estate tax exclusion rose to $5.49 million, up from $5.45 million in 2016. The lifetime exclusion is separate from the annual gift tax exclusion and allows you to leave $5.49 million to heirs free of federal estate and gift taxes. These limits can and do fluctuate on an annual basis, so it makes sense to review them regularly.


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Fact vs. Fiction

We understand that it can be tricky navigating the world of personal finance. Everyone seems to have an opinion, and it can be hard to know what to believe. We created this series as a way to present and debunk some of the most common financial myths.

Fiction: Taking a loan from my retirement plan is not a big deal—I can always fund my retirement later.

Fact: Borrowing from your 401(k) or other retirement plan is a major decision that should not be made lightly. Several issues could affect your ability to continue to make headway on your retirement goals. These include double-taxation (you will repay the loan with after-tax dollars, and because the interest you pay is not tax-deductible, you will pay tax on it again when you do retire and start withdrawing funds) and reduced take-home pay until you make good on the loan. Also keep in mind that your repayment schedule will accelerate if you leave your company, and if you fail to repay by the deadline, you will trigger a taxable event (your loan balance would be treated like a distribution and you would have to pay the 10-percent early withdrawal penalty if you are younger than age 59½). Lastly—but no less important—you lose the magic of compounding for any funds you take out prematurely.

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Last Updated: 02/21/2017