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Retirement Planning With 401(k) Investing: A Quick Review
Now that 2018 is more than halfway completed, were you aware that you can increase the amount you put into your 401(k)? If not, there’s still time. Each year, the IRS assesses what the contribution limit should be, which is an important number for those focused on 401(k) investing for their future. For three years, the IRS held the limit to $18,000 per year. For 2018 and until they make another change, the limit will be $18,500. This means that investors can make changes to how much they contribute at any time, as long as their elective contributions don’t exceed $18,500.
It’s also important to note that if you’re age 50 or older, you can take advantage of something called the “401(k) catch-up,” which allows an extra $6,000 per year to be invested into the account. This amount remains unchanged, but it’s still a useful tool for those who got a late start investing for retirement.
If you’re self-employed or own a small business, you will also see a change in the amount you can save in your SEP IRA or solo 401(k). It goes up from $54,000 to $55,000. If your employer lets you take advantage of after-tax contributions in your 401(k) investing, you will also be able to take advantage of that increase to $55,000.
Furthermore, the phase-out of deductibility for IRA contributions will also change. There will be an increase to income phase-outs adjusted to the gross income limits for those interested in the saver’s credit. Unfortunately, the limit to your individual retirement accounts will remain the same at $5,500 per year. This has gone unchanged for six years.
Your IRA catch-up (age 50+) opportunities also remain unchanged at $1,000. However, your deductions for IRA contributions to a traditional IRA are phased out at higher income levels. You can still contribute if you’ve earned too much to get a deduction, but it’s going to be non-deductible.
Are you interested in the savers credit? You can get the savers credit if you and your spouse file jointly and make up to $63,000. This is an increase from $62,000 last year. If you’re filing as the head of the household, the limit will increase by $750.00 from last year to $47,250, and from $31,000 to $31,500 for singles and married couples filing separately.
There are a number of ways to get ahead on your retirement goals. To make sure you don’t miss a step, contact us at Family Investment Center. As a fiduciary, we’ve always acted in your best interests – so let’s talk about your goals and let us show you the ways you can reach or exceed them.