For most people, today is the last day to maximize your 401k plan contributions. You can contribute up to $17,000 this year ($5,500 more if you are at least 50). Even if you can’t contribute the max, at least contribute enough to get the full match from your employer. That’s a 100% return you will not find anywhere else!
If you are self-employed and have a solo 401k plan, today is also the last day to contribute for 2012. You can contribute up to $50,000. Since it is optional, you don’t have to contribute if you had a slow year. If you did not contribute that much this year, now is the time to start planning for next year. You’re in charge of your own retirement planning. You don’t have an employer that will automatically deduct your contributions from your pay check. Be proactive and set a schedule for saving and stick with it!
If you turned 50 this year, don’t forget you can sock away more money than you used to be able to. That’s an extra $1,000 you can contribute to a traditional or Roth IRA. You have until April 15th to do so.
Here are the new 2013 IRS rules that will help you sock away more money in individual retirement accounts and your 401(k)s, provided you qualify under the adjusted gross income limitations:
- The annual limit on contributions to 401(k) plans is rising to $17,500 from $17,000. Annual contributions to IRAs, both traditional and Roth, are rising to $5,500 from $5,000.
- For those over 50 years old, the additional “catch-up” amount allowed will remain the same at $1,000.
- For solo 401 (k) plans, the limit will be $51,000, or $56,500 including catch-up contributions, in 2013.
- For married couples, the upper income limit on contributions to Roth IRAs will rise to $188,000 from $183,000. For singles, the limit will jump to $127,000 from $125,000.
- More than 56 million Social Security recipients will see their monthly payments go up by 1.7 percent next year. Social Security payments for retired workers average $1,237 a month, or about $14,800 a year. A 1.7 percent increase will amount to about $21 a month, or $252 a year, on average.
- Americans living overseas are eligible for the foreign earned income exclusion of up to $97,600, up from the current $95,100.
- The limit on tax-free gifts will rise to $14,000 from $13,000. Spouses can combine their annual exclusions to double the size of the gift.
Credit goes to Forbes.com for that info.