As we head into the busy holiday season full of festivities, there are probably many to-do items on your year-end list. One item that will be important for you to review is your retirement plan contributions year-to-date. Are you on track to max out your 401(k) and IRA?
There is an annual limit set by the IRS for qualified plan contributions. For example, for 2014, you can contribute up to $17,500 to your 401(k), 403(b) or other profit sharing plans. If you are age 50 plus, you can add a bonus to your savings called a “catch-up” contribution, which is $5,500 for 2014. The IRS just came out with the new limits for 2015 and now is a great time to review your deductions for next year to make sure that your payroll starts the New Year off recognizing the higher amount.
Don’t miss out on one of the best savings accounts available – your 401(k). In addition to your tax-deferred contribution, many employers match a portion of your contribution. Consequently, even if you cannot max out your retirement account, consider attempting to contribute at least the amount that your employer will match. It is free money to you!
No 401(k) through your employer? There are other types of qualified plans, such as SIMPLE or SEP IRAs and 457(b) plans. To see the limits for both 2014 and 2015, click here for the IRS webpage that outlines the standard limits.
Additionally, you may also be eligible to contribute to a Traditional or Roth IRA depending on certain factors such as the amount of your modified adjusted gross income or whether or not you participated in a work sponsored retirement plan. The limit for 2014 for IRA contributions is $5,500 with a $1000 catch-up if you are 50 and older. Talk to your CPA about what is allowable for you.
It’s never too early to start planning for your future. Secure retirements are our specialty, give yourself a gift – call for your customized roadmap to retirement today.
Associate Financial Planner