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Annual Contribution Limits
Recently the IRS released the contribution limits for 2013. The good news for many is that the limits are increased slightly from 2012 and prior. This allows people who are able, to stash away more for retirement on an annual basis. For 401(K) plans and IRA accounts the new limits are as follows:
|401(k)||$ 17,000.00||$ 17,500.00|
|IRA-Trad||$ 5,000.00||$ 5,500.00|
|IRA-Roth||$ 5,000.00||$ 5,500.00|
For those 55 and older the “catch-up” contribution amount remains unchanged at $5,500 a year for 401(k) accounts and $1,000 year for IRA accounts. This allows those who are close to retirement age a way to expand their retirement savings more quickly.
If you have a 401(k) plan and you are looking to contribute additional money, there are several ways to do this without breaking the bank. First make sure that you are taking advantage of your employers match. Find out what you need to contribute in order to receive the maximum match amount and make sure that you do just that. Secondly, take a more gradual approach to increasing your contributions. Step up your contribution amount incrementally each month or quarter as your plan allows. This will make it less painful and increase the likelihood of maintaining that contribution amount. Lastly, consider adding any unexpected windfalls to your retirement account. If you receive a raise or an unexpected bonus ask your payroll department to increase your 401(k) contribution for a period of time to compensate for this.
Some of the same strategies can be utilized for those with IRA accounts. Also remember to check with your accountant prior to year end and make sure you are maximizing your retirement accounts to receive the greatest tax benefit.
To further assist with your retirement planning there are various web calculators you can use to see if you are on track for retirement. Please see our website for a variety of retirement planning calculators: http://www.wealth-mgt.net/new/wealthmanagementassociates/default.asp
Always remember that at WMA we are well versed in all the various retirement vehicles, and want to be your go to resource for all of your retirement income planning needs.