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401(k) Investing: Tracking Changes in 2018

There’s Still Time in 2018 to Make Changes in Your 401(k) Investing

 

The IRS announced earlier in 2018 that retirement plan contribution limits for 401(k)s are changing. The increased contribution limits can help you put more away to reach your retirement goals and there’s still time in 2018 to put this change into action.

For three years, the IRS held the amount you can contribute to your 401(k) to $18,000 annually. This year, your opportunity for 401(k) investing improves as the limit goes up to $18,500 (plus a $6,000 catch-up contribution for those 50 and older). They also increased income phase-outs for IRA contributors as well as adjusting gross income limits for those who get the “saver’s credit.”

Changes to IRAs

If your investments include a SEP IRA, the overall defined contribution plan goes up to $55,000 per year (it was previously $54,000), which is seen as particularly beneficial to small business owners and others who are self-employed. 

For deductible IRA phase-outs, the IRS is allowing people to earn more in 2018 and deduct contributions to a traditional pre-tax IRA. However, keep in mind that if you earn too much to get a deduction, you can still contribute to this vehicle, it just won’t be deductible.

If you’re an IRA contributor that isn’t covered by a retirement plan from your workplace, and your income is between $189,000 and $199,000 the deductions are phased out, which is up $3,000 from what was allowed last year.

Changes to the Saver’s Credit

Low- and moderate-income workers who are looking to take advantage of the saver’s credit get a $1,000 increase in what they can make and still qualify for the credit. The IRS allows couples that file jointly in 2018 to make $63,000, up from $62,000. Head of household limits go up from $46,500 to $47,250, and single or married and filing separately can earn $31,500 and still qualify for the credit, which is a $500 increase from last year.

Family Investment Center stays on top of changes like these and our team has many ideas, strategies and plans that meet the needs of each individual investor as these changes continue to take place. Contact us today and let’s talk about how we can help keep you on track with your retirement plan

 

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