401k max contribution
401k max contribution: Know the changes for 401K accounts and other retirement plans in the coming year
Anyone who has bought food, filling the gas tank or paid insurance premiums lately have been surprised to see that, according to the Index of Consumer Prices Urban Labor Department (CPI-U, its acronym in English), the rate inflation practically not changed -only 1.2 percent from September 2012 to September 2013.
This is not good news for those who hoped to increase their contributions to an IRA, 401 (k) or other retirement accounts with tax benefits because the IRS uses the annual performance September CPI-U to adjust or not based on the cost of living, many of the contributions of retirement accounts that you and your employer may do next year. This is a summary of the prediction for 2014:
Retirement plans defined contribution. The 401k max contribution you can make to a workplace 401 (k), 403 (b), 457 (b) or to a federal retirement plan for federal employees and military personnel (Thrift Savings Plan) remains at $ 17,500. Consider these other factors:
-People Over 50 years may also make an additional to their retirement plans of $ 5,500 as compensation contributions (unchanged from 2013) contribution. -The Annual limit for combined employee contributions and employer increased by $ 1.000 to 52.000.
As retirement plans can limit the percentage of salary that can bring, your maximum contribution may be reduced. (For example, if the 401k max contribution is 10 percent of your salary and you earn $ 60,000, could only provide 6,000).
Individual Retirement Accounts (IRA). The maximum annual contribution to IRAs remains of 5,500 (plus another 1,000 if greater than 50-that has not changed compared to 2013). The 401k max contribution to traditional IRAs are not affected by personal income, but if your modified adjusted gross income (AGI) exceeds certain limits, the maximum amount you can contribute to a Roth IRA gradually decreasing:
-For Single persons or heads of household, the range goes AGI decreased from 114.000 to 129.000 (range increased from 2013, going from 112,000 to $ 127,000). For above $ 129,000, you can not make contributions to a Roth account.
-For Married couples filing their tax return together, the ranks of their retirement plans ranging from 181.000 to 191.000 (before he went from 178.000 to 188.000).
prosecutor for contributing to retirement accounts credit. As an incentive to help workers with low and moderate incomes to save for retirement through an IRA or retirement plan offered by the employer, are offered the possibility to access a tax credit of up to $ 1,000 (2,000 dollars if filing joint tax returns). This credit reduces your tax bill dollar for dollar, in addition to any other tax deduction already received for its contribution.
The maximum income limits to get this tax credit for 2014 increased to $ 60,000 for those filing joint returns, $ 45,000 for heads / as of household, and $ 30,000 for single or married individuals filing separately. See IRS Form 8880 for more information.