The start of a new year is a good time to take a look at your finances and pledge to do better. And if you’re like many Americans, you’re a few years (or more) behind on retirement savings. If part of your financial resolutions this year is to contribute more to your retirement, you may want to consider supplementing your 401(k) with an Individual Retirement Account (IRA).
An IRA is a personal savings plan meant to be used exclusively for retirement. There are multiple plan types to choose from depending on your specific retirement goals. Supplementing your retirement with an account that you are in charge of means that you have more control over your future. And the best part is getting peace of mind for your retirement does not have to be difficult or expensive. In fact, it’s relatively easy and gives you a chance to significantly add to your retirement savings. Check out this important information regarding IRA accounts.
Traditional/Roth IRA Contribution Limit for 2019
For the first time since 2013, there has been an increase to annual IRA contributions (both traditional and Roth):
- Younger than 50: $6,000, which is $500 above last year’s contribution limit.
- 50 years old or older: The catch-up contribution is $1,000. This amount remains unchanged as the catch-up contribution is not subject to an annual cost-of-living adjustment. So if you are 50 or older, the maximum you can contribute to your IRA is the base $6,000 with the $1,000 catch-up amount for a total of $7,000.
Who can contribute to an IRA?
Traditional IRA: You can contribute if you (or your spouse if filing jointly) have taxable compensation but not after the age of 70 ½ or older.
- Roth IRA: You can contribute at any age if you (or your spouse if filing jointly) have taxable compensation and your modified gross income is below certain amounts (see 2018 and 2019 income limits).
IRA contributions after age 70 ½ :
You can’t make regular contributions to a Traditional IRA in the year you reach 70 ½ and older. However, you can still contribute to a Roth IRA and make rollover contributions to a Roth or Traditional IRA regardless of your age.
Can you contribute to an IRA if you participate in a retirement plan at work?
Yes. You can contribute to a traditional or Roth IRA whether or not you participate in another retirement plan through your employer or business. However, you may not be able to deduct all of your traditional IRA contributions if you or your spouse participates in another retirement plan at work. Roth contributions might be limited if your income exceeds a certain level.
Some of the benefits associated with IRA’s include:
- Insured for up to $250,000
- Some plans may have tax advantages1
- Safe investment for your retirement
- Roll over existing retirement plans
So if you’re thinking about how you will retire, consider an IRA to supplement your current 401(k). If you have any questions about IRA’s or how to open your account, stop by any branch location or give us a call at (505)292-6343 ext.5
Consult a tax expert regarding any tax advantages regarding your individual retirement account. Federally insured by NCUA. Sandia Area membership required for all accounts.
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