Should you Increase your Retirement Plan Contributions in 2014?
Retirement Planning: Contributing the Maximum
When planning for retirement, you can reap major benefits from maximum contributions for these reasons:
1. Retirement plan contributions are typically pretax.
2. Retirement plan assets can grow tax-deferred — meaning you pay no income tax until you take distributions.
3. Your employer may match some, or all, of your contributions pretax.
Also, consider contributing to a traditional IRA. If you participate in an employer-sponsored retirement plan, your IRA deduction may be reduced or eliminated, depending on your income. But you can still benefit from tax-deferred growth.
Consider your Roth options as well. Contributions aren’t pretax, but qualified distributions are tax-free.
Retirement plan contribution limits generally aren’t going up in 2014, but consider contributing more this year if you’re not already making the maximum contribution. And, if you are already maxing out your contributions, but you’ll turn age 50 in 2014, you can put away more this year by making “catch- up” contributions.
|Type of contribution||2014 limit|
|Elective deferrals to 401(k), 403(b), 457(b)(2) and 457(c)(1) plans||$17,500|
|Contributions to SIMPLEs||$12,000|
|Contributions to IRAs||$5,500|
|Catch-up contributions to 401(k), 403(b), 457(b)(2) and 457(c)(1) plans||$5,500|
|Catch-up contributions to SIMPLEs||$2,500|
|Catch-up contributions to IRAs||$1,000|
For more retirement planning ideas on making the most of tax-advantaged retirement-savings options, contact Jim Komos at 216-831-7171 or via email at firstname.lastname@example.org. You can also submit an inquiry at our contact us page.