Legislation which adjusts Wisconsin’s IRA and 401K limits to conform to federal law next year has advanced at the Capitol. Failure to pass the bill would mean Wisconsin will revert to the old limits from 2001, limiting taxpayers to contribute $2,000 to an IRA and $7,500 to a 401k (rather than the current $5,000 and $16,500) without being taxed and penalized. Wisconsin is the only state in the country whose IRA and 401K limits do not conform to federal law. The bill (AB-648) was approved Tuesday by the legislature’s Joint Committee on Finance on a 15-1 vote.
(The bill makes permanent the provision that allows members of the National Guard and the U.S. military reserves to make, without penalty, withdrawals from individual retirement accounts (IRAs), if they are called to active duty for a period that exceeds 179 days. Allows individuals who receive a military death gratuity to contribute that amount to a Roth IRA, notwithstanding the annual contribution limit that would otherwise apply. Allows reservists called to active duty to withdraw amounts from their health flexible spending accounts without incurring penalties. Excludes from gross income any state or local bonus payment made to members of the U.S. military or their dependents, if the payment was made because of the member’s service in a combat zone.)