Saving for retirement can be quite a challenge. Between living expenses, paying down your debts, and your tax burden, it can be a challenge to find room in your budget to save an adequate amount for retirement.
As you may already know, contributing to a 401(k) retirement plan is one of the most tax-advantaged ways to save for retirement. These funds allow you to save money with all taxes deferred, meaning you don't have to pay taxes on the money until you begin taking distributions in retirement. These retirement accounts provide workers with a great way to save for retirement while avoiding income taxes on that money until later in life.
Of course, the Internal Revenue Service limits the amount of money you can contribute to your 401(k) each year. These contribution limits are occasionally raised, to allow for the impact of inflation. Since inflation can have a negative impact on retirement budgets, it's always great news to hear that the IRS has lifted contribution limits for 401(k) plans. In fact, it was recently announced that the contribution limit for 2015 has been raised to $18,000.
In addition to this higher contribution limits for all Americans, the “catch-up” contribution (for workers aged 50 and over) has also been raised from $5,500 to $6,000 for 2015. Therefore, if you're 50 or older, you can contribute up to $24,000 dollars to your retirement fund next year. This is particularly great news if you weren't able to save much for retirement in your younger years. If you're at your earnings peak, and worried about affording your impending requirement, these higher contribution limits should ease some of your worries.
Now that you're able to save even more for retirement, contact your human resources department at work to adjust your paycheck withholding. Having the money sent directly to your retirement fund is the easiest and most painless way to save for your future.
This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation.
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