[Video] Maximize Annual Retirement Contributions

by Michelle Smalenberger, CFP® / October 21, 2017

Maximize Annual Retirement Contributions

One of the items at year-end that we need to be thoughtful of is how much money we’ve put into your retirement accounts available to us.  This is one item that is part of our year-end tax planning checklist. In this video, we discuss maximizing your annual retirement contributions:

MICHELLE SMALENBERGER, CFP®

There are different types of accounts and we’re going to talk through the maximum amounts you can contribute.

*401(k): Maximum Contribution = $18,000

With Catch-Up Contribution over age 50 = $24,000

*Roth 401(k): Maximum Contribution = $18,000

With Catch-Up Contribution over age 50 = $24,000

*You can only contribute the maximum between your 401(k) and Roth 401(k) for a total of the maximum amounts each year.  Meaning that between what you contribute into your 401(k) and your Roth 401(k) combined the total can’t be over the maximum of $18,000 or $24,000, depending on your age.  For example you could contribute $9,000 into your 401(k) and $9,000 into your Roth 401(k).  Or you could contribute $12,000 into your 401(k) and $12,000 into your Roth 401(k).

**IRA: Maximum Contribution = $5,500

With Catch-Up Contribution over age 50 = $6,500

**Roth IRA: Maximum Contribution = $5,500

With Catch-Up Contribution over age 50 = $6,500

*You can only contribute the maximum between your IRA and Roth IRA for a total of the maximum amounts each year.  Meaning that between what you contribute into your IRA and your Roth IRA combined the total can’t be over the maximum of $5,500 or $6,500, depending on your age.  For example you could contribute $2,750 into your IRA and $2,750 into your Roth IRA.  Or you could contribute $3,250 into your IRA and $3,250 into your Roth IRA.

Once you’ve maxed out your retirement accounts you can consider making IRA contributions.  Or you can contribute to a combination of these accounts.

VERY IMPORTANT TO REMEMBER:

While these are maximum amounts you can contribute to your accounts this year, you may still potentially be limited by another factor.  You can contribute the greater of your earned income OR the maximum of these limits we’ve discussed above.  But if you were only earning $4,000, for example, then that would be the maximum amount you could contribute.

This is only one item on your year-end checklist to review.  Be sure to download your copy!

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Michelle Smalenberger, CFP®

I have a passion for helping others develop a path to financial success! Through different lenses on your financial picture, I want to help create solutions with you that are thoughtful of today and the future. I have seen in my life the power of having a financial plan while making slight changes of direction from time to time. I believe you can experience freedom from anxiety and even excitement when you know your finances are on track.