Retirement Plan Contribution Limits for 2020
The 2020 contribution and benefit limits were announced in early November by the IRS. The annual limit for IRAs remains the same at $6,000 with the catch-up contribution for individuals aged 50+ also remaining at $1,000.
There are slight increases for other retirement plans, as follows:
For 401(k), 403(b) and most 457 plans, plus the federal government’s Thrift Savings Plan, the limit is bumped up $500, from $19,000 to $19,500 annually. For individuals aged 50+, the catch-up contribution also goes up $500, from $6,000 to $6,500.
In addition, SIMPLE retirement accounts now have an increased contribution limit of $13,500, up $500 from the current $13,000.
Retirement plan account holders should also be aware of annual limitations and income phase-outs for defined contribution and defined benefit plans in the workplace.
There are new income ranges for determining eligibility to contribute to a Roth IRA and to claim the Saver’s Credit, which all increased for 2020. The income phase-out in 2020 for individuals contributing to a Roth IRA went up for singles, heads of households, and married couples filing jointly. Additionally, taxpayers may be able to deduct contributions from a Traditional IRA if they meet certain criteria. A list of those figures is available in IRS Notice 2019-59.
As always, this new information is strictly for one’s own knowledge, and we encourage individuals to consult their trusted advisors regarding their specific financial situations to determine what works best for them.
Boost your retirement savings with alternative assets
Whether you’re already in the real estate market, invest in precious metals, or are interested in putting private equity in your retirement plan, nontraditional investments are a powerful way to build a more diverse retirement portfolio that provides a hedge against stock market volatility. What many people don’t know is that there are many different types of accounts that can be self-directed to include those nontraditional investments within them. So, if you’ve reached your annual contribution limit on an employer sponsored plan, or an IRA with a brokerage firm, you can still open and fund an account with Next Generation through a transfer or a rollover. Our self-directed IRA specialists are happy to review your options with you.
The deadline to contribute to your retirement plan for the 2019 tax year* is April 15, 2020, but it’s always the right time to contact Next Generation to open your self-directed IRA. You can arrange a complimentary educational session if you have questions about self-direction as a retirement strategy. Alternatively, you can contact our helpful team of professionals directly via phone at 888.857.8058 or email at NewAccounts@NextGenerationTrust.com. You can always read more about the many options and benefits of self-direction on our FAQs page.
*Please visit our website for 2019 contribution limits.
Generation Y’s Guide to Saving for Retirement
Generation Y (The Millenials), by broad definition, is comprised of those born in the 80s through early 2000s—and the very thought of retirement plan savings at our age can be daunting. Right off the bat, the same fears are dug up, time and time again; fear of money loss, fear of misdirection, pushing away tomorrow’s retirement in lieu of today’s excitement.
We’re a part of a generation that challenges the status quo and asks questions. We’re part of a generation that demands equality regardless of tenure. We’re also part of a generation that watched the economy drop out from beneath us. We’re a generation that cannot afford to ignore retirement planning.
So how can we move forward, and still balance fun spending with saving for our golden years? These easy tips will get you started on the road to investment.
A Little Goes a Long Way There are no rules that say you have to move a huge amount monthly, or per paycheck into savings. You can automate your payments per check—even if it’s just $25 per paycheck. Whatever you can manage is better than nothing. As for Next Generation Trust Services’ part, we expect to have incoming direct deposits functional during our first quarter, so that you can make your contributions with relative ease.
Pay Yourself First It’s easy to find yourself without any savings if you make it the last priority. It’s amazing what you can learn to do without (or not even notice is missing) if you put savings away first, instead of trying to put “extra” into savings.
Bank Your Bonuses Any extra earnings that flow your way, whether it’s a company bonus, a few bucks from a scratch-off, your tax refund or some unexpected birthday money—bank it. Even if you can’t put away all of it, put away half; you weren’t counting on it, so you won’t miss it.
Open a Roth IRA Tax free earnings is not just a buzzword, it’s a money saver, and the income limitation is over $100,000, so most people are eligible. Not to mention, that anything that you put in (out of pocket contributions) you can take back out without penalty or tax. Whereas it’s preferable to keep it in the plan where it makes tax free money, it’s truly an emergency fund.
Budget, Budget, Budget—Reward Plain and simple, if you want to save money, you have to spend less than you earn and there is no way to know that if you don’t track. Writing out a budget can seem like a major downer as you watch where your money actually goes, but by setting yourself budgeting goals, you can control your spending and reward yourself for a job well done. For example: Your weekly grocery budget is $80. If you come in under $70, you get a $5 splurge from the bakery. Total cost is still below budget; you save at least $5 and treat yourself at the same time. Win-win.
Take Advantage of Social Media Use Twitter, Facebook and LinkedIn to follow and like professionals that have done it all before. People are chock full of information for you; use the internet as the learning tool to get a grip on learning how to invest and find reliable information. You can follow @NextGenTrust on Twitter for tips and updates. OnlineSchools.com has a list of 100 Best Twitter Feeds for your Financial Intelligence, and there are plenty more resources for you out there.
These are just a few tips for the Boomer’s Babies on getting started in the financial world that seems to be filled with pitfalls and snags and mountains to climb—but what is life without a sense of adventure?
2010 Contribution Deadline Looms
2010 Contribution Deadline
As many of you know, the tax deadline and contribution deadline for 2010 has been extended until Monday, 4/18/11. As it is quickly approaching, it is imperative you make arrangements now if you wish to make an IRA contribution for 2010.
For our existing clients, those whose account has already been opened, we can accept contribution checks up until 4:00 PM on Monday, 4/18/11.
For those who have been considering opening an account, if we have your completed account documents and all required information as well as your contribution check before 2:00 PM on Friday, we can still get your account opened and process your contribution for 2010.
For all those looking to really jump start their investing, please note you may also make your contributions for 2011 as well as 2010.
As always, contact any of our staff members for questions at 888-857-8058.
To find forms to open an account:
Forms to make a contribution: