Contribution Limits Increasing in 2018

Retirement Planning

Contribution Limits Increasing in 2018

Posted by COTO Insurance & Financial Services
6 years ago | December 4, 2017

Retirement planning seems like it would be a relatively simple subject. You just save money for the future, make wise decisions with your funds, and then one day you retire on a comfortable income, right?

It sounds pretty straightforward, but you also have to pay attention to changing guidelines and IRS limitations on tax-advantaged retirement plans. That’s why we strive to bring you the latest news, each time these small changes occur.

This time, we have some good news for those saving for retirement: In 2018, you can contribute more to your qualified retirement account!

The limit for pre-tax contributions to accounts such as 401(k), 403(b), and Thrift Savings Plans has been raised by 500 dollars per year. Now you can set aside $18,500 for retirement next year, and each year thereafter (unless the IRS raises the limit again).

Five hundred dollars might not sound like a huge difference, but remember to factor in the power of compounding interest over the years. Plus, since contributions go into your retirement account on a pre-tax basis, you will also lower your taxable income by another 500 dollars. So, this change might save you a bit of money on your income tax bill, too.

If you’re age 50 or over, remember that you can also make catch-up contributions of $6,000 per year, for a total of $24,500. This can serve as a terrific opportunity to make up for lost time, if you weren’t such a dedicated saver in your early working years.

For more information on retirement planning, specifically with regard toward the insurance options available to you, give us a call. We will discuss your particular concerns and needs, and help you to formulate a plan that suits your situation.

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