Here's some welcome news for people putting money away for retirement: The IRS has raised the 2019 contribution limits for various types of retirement savings accounts and for health savings accounts. If you participate in a 401(k) or similar plan, you should keep the new limits in mind as you think about your cash flow and financial planning for next year. Employer-sponsored plans The annual limit on contributions in 2019 for tax-advantaged plans such as 401(k), 403(b), 457 and so on is $19,000, up from the current limit of $18,500. And if you're age 50 or older at any time during the year (even if your 50th birthday falls on Dec. 31), you can also make additional catch-up contributions of an additional $6,000, for a total annual contribution of $25,000. Self-employed 401(k) plans People who are self-employed can also set up and fund their own 401(k) profit-sharing plan, which allows for the same contribution limits as above. The self-employed can make two kinds of … [Read more...] about Here are 2019’s higher limits for retirement savings accounts
Traditional ira income limits
By Paul Premack Published 5:34 pm CDT, Friday, August 17, 2018 Dear Mr. Premack: My mother-in-law died (90 years old) and left a traditional IRA to her estate. She did not name beneficiaries, she has four sons, but checked the estate box. I keep getting conflicting answers, is the estate taxed on income or are the beneficiaries of the will (4 brothers) taxed on the income when they receive their portion? Where does the tax burden reside? Someone else said that the estate can file income taxes and pay the taxes over 5 years. I appreciate the clarification. – B.S. An IRA (individual retirement account) is a tax-deferred savings program used by millions of Americans to help fund their retirements. IRAs are great tax and retirement tools, and they need to be integrated into each person’s estate planning. Universally, when an IRA is established and funded, the owner also designates specific individuals to receive the funds in case of death. At age 59 ½ the … [Read more...] about IRA should have designated beneficiary for best tax result
By Dayana Yochim/NerdWallet The average household led by a retiree makes $48,000 annually before taxes and spends roughly $46,000 a year. That's according to the Bureau of Labor Statistics' (BLS) measure of the income and outflow of "older households," meaning ones headed by someone 65 or older. Meanwhile, the annual average pretax income for all U.S. households is about $74,000 and expenditures are $57,000. While the main source of money for those still toiling in the 9-to-5 world is, of course, wages from work, who signs the average retiree's $4,000-a-month paychecks? Here's the answer to the $48,000 question. Retirees' trillion-dollar allowance By far the biggest source of income for retired Americans is Social Security, which in 2018 will pay out about $1 trillion in benefits, according to data from the Social Security Administration. As of May, the average monthly Social Security benefit for retired workers was $1,412, or just shy of $17,000 a year. (Remember, this is per … [Read more...] about Could you get by on the average American’s retirement income?
IRAs are a great way to save for retirement, because they give you a tax break for doing so. It’s basically a reward for looking after your future self. But how do you maximize the benefits of an IRA? Here’s how much and how often to contribute to your IRA. How much should I contribute? In a perfect world, the answer is, as much as possible, up to the $5,500 annual maximum ($6,500 if you’re 50 or older). However, the real world isn’t usually that simple. You may have a limited amount of money, and you may have a retirement plan at work. The good news? IRAs can complement workplace plans such as 401(k)s, or fill in for them if your employer doesn’t offer one. Here’s one way to think about divvying up your money: Contribute enough to your 401(k) or other workplace retirement plan to get the full company match. That’s free money, sometimes dollar for dollar up to a specific percentage of your pay. You don’t want to forfeit … [Read more...] about How much should I contribute to an IRA
WASHINGTON — There are many financial decisions that a widow has to face in the early days after the loss of a spouse. One of them is deciding how to handle the assets that come to you from traditional individual retirement accounts (IRAs) that were owned by your spouse. The rules can be complicated, and making an uninformed decision may result in having less of the money that was left to you to support yourself and your family. While we suggest that you consult with both tax and financial advisers to help you make the best decision, here are a few things to know. There are four main options a widowed spouse can take when it comes to inheriting traditional IRA assets as a direct beneficiary (i.e., not through a trust). Those options are: Roll over assets into an IRA in your name Roll over the assets into an inherited IRA account Take the assets out for spending Convert the assets to a Roth IRA A fifth option, disclaiming all or part of the assets, may apply if you think … [Read more...] about 5 facts widows need to know about inheriting traditional IRAs