2014 IRA Contribution Limits Stay The Same

IRA Contribution LimitsThe IRA is the most versatile tool in your retirement planning toolbox. It’s not surprising that an important step in the retirement planning guide is to understand all the savings tools available. That includes staying on top of yearly changes to the IRA contribution limits.

Each year the IRS announces the inflation adjusted numbers for the traditional and Roth IRA contribution limits along with the traditional IRA deduction limits. These cost of living adjustments are made when the inflation index meets a certain criteria. In turn, the adjustments prevent inflation from eating away at the IRA limits and your ability to save for retirement.

2014 Maximum IRA Contribution Limits

The 2014 IRA contribution limits will look just like it did for 2013. Both the traditional and Roth IRA will have the same contribution limit, which will max out at $5,500. If you are 50 years or older, there is a $1,000 catch up contribution. Continue Reading…

2014 401k Contribution Limits Unchanged

401k Contribution LimitsThe 401k plan has become the popular retirement plan offered by companies today. One of the keys to retirement planning is knowing about the savings tools available to you. If that happens to be a 401k, it pays to know when changes are made.

Every year the IRS must calculate cost of living adjustments for the 401k and other retirement plans. In keeping with tradition, the IRS recently released a slew of information for the 2014 tax year including the 401k contribution limits.

The decision to raise the 401k limits is based on an inflation index, specifically the Consumer Price Index (CPI). If the CPI meets a certain threshold the IRS will adjust the contribution limits accordingly. Some years inflation is high enough to call for a change other years it’s not. Either way, the point is to make sure the limits aren’t eaten away by inflation. Continue Reading…

401k Plan: The Definitive Guide

401k plan guideAt some point in your working life, you’ll be handed a 401k plan packet full of information and investment choices, told to fill things out, and, if you’re lucky, someone might actually explain it all for you. At least, that’s how it happened for me. Except, a couple of salesmen from the plan provider rushed through it in fifteen minutes. When you know saving for retirement is important, it’s hard to put your trust in a tool that you don’t entirely understand. Luckily, I knew enough to get by while I researched the rest on my own.

The 401k plan is the staple retirement plan offered by employers these days. Yet, dealing with one can be overwhelming and tricky. Your 401k is more than just another retirement account. It’s your primary savings tool for retirement. This guide will tell you everything you need to know about the traditional 401k plan, the rules and limits, so you can take full advantage of this employer-provided retirement tool. Continue Reading…

Roth IRA Rules: Everything You Need To Know

Roth IRA RulesWhether you know it or not, retirement is the biggest savings goal of your life. In order to succeed you need a plan that takes advantage of the tools available. Tools like a Roth IRA help thanks to its tax advantages. But is it a good fit for your retirement plan? This guide covers everything you need to know about the Roth IRA rules and more. If you want to be fully informed, I suggest you look over the traditional IRA rules too.

Why A Roth IRA?

The Roth IRA is a relatively new retirement account introduced back in 1997. The plan was to offer something different from the traditional IRA. To that end, it was a success.

The biggest difference is the Roth uses after tax income. The Roth IRA takes after tax dollars and allows for tax-free growth of that money. That means, the money you put in the IRA is already taxed, so it won’t be taxed when you take it out. In return, you lose the tax deduction you would get with a traditional IRA. Continue Reading…

Ways To Avoid The IRA Early Withdrawal Penalty

If you’re looking for some semi secret loophole to get money out of your IRA early, so you can spend it, think again. The tax code has that covered. The gist of the IRA early withdrawal penalty states that anyone under age 59½ who withdraws money from their IRA, is hit with a 10% penalty. Of course, the number one way to avoid the penalty is to wait until you’re old enough to get your money. That’s the point of an IRA in the first place – to keep the money there until retirement.

That said, the IRA rules have exceptions and exemptions where you won’t be penalized for taking money out early.  Some are added benefits built into the IRA, others help with unforeseen hardship, and the IRS is very specific about each one. Continue Reading…