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
President Donald Trump recently issued an executive order aimed at strengthening retirement security in America. It's a step in the right direction, but tackling two additional issues would truly address the pressing needs of working Americans who want to save for retirement. Mr. Trump's Aug. 31 order directs the Department of Labor and the Department of Treasury to encourage the adoption of multiple employer plans (MEPs), which allow small employers to pool resources and costs to offer retirement plans to their employees. This is good news, given that only about half of all workers are covered by a retirement plan at work. Research shows that having one significantly boosts workers' accumulation of retirement savings. MEPs also represent a way for the private sector to better address the needs of working Americans. A mutual fund company, bank or insurance company could develop and offer an MEP that unrelated employers could adopt to cover their employees. The financial … [Read more...] about Trump takes a first step to boost retirement security
Spending generally declines during retirement for most budget items, but charitable giving tends to buck this trend. A new study, conducted by the Women's Philanthropy Institute (WPI), examined the spending habits of American households as workers transitioned into retirement. It found that married couples and single women tended to maintain their levels of charitable giving both before and after retirement. Single men, however, tended to reduce their charitable giving as they left the workforce. Interestingly, the WPI report found that women, both single and married, are generally less confident than men about their financial health in retirement, and they're particularly focused on not outliving their savings. That's a reasonable fear, given that women tend to live longer than men. What's the best way for all groups of retirees -- men and women, both single and married -- to donate to charities without worrying about running out of money? It's a mistake to simply consider your … [Read more...] about How to fund your charitable giving in retirement
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?