If you already passed the half-century mark this year or if you are a getting ready to pass it, you may have some questions and concerns as it relates to planning for another tax year and future retirement. There are different tax planning considerations that you will need to be aware of once you reach the age of 50.
If you want to make sure you have an effective and efficient plan in place, we recommend that you surround yourself with a knowledgeable and professional team. We recommend that each year you make an appointment to meet with a financial planner, an estate planning attorney, and an accounting team. Meeting with your team will allow everyone to create a strategy that works and take the next steps with the plan that has been established.
As you inch closer to retiring, are you making sure you are maximizing the contributions to your retirement plan through an Individual Retirement Account(IRA) or a 401(K)? This year, individuals were able to set aside up to $19,000 in their 401(k). The most an individual could save in their 401(k) in the previous year(2018) was $18,500. Individuals were allowed to save $6,000 in their IRA in 2019, compared to $5,500 in 2018. The limits for the IRA(Individual Retirement Accounts) were increased this year for the first time in 6 years.
A catch-up contribution will allow individuals 50 and over to make supplemental holdbacks to their IRA and their 401(k) after they have exceeded the limits that have been set by the IRS. The catch-up contributions have not changed over the last few years and remained the same for 2019. This year allowed individuals to place an additional $6,000 into their 401(k) and an additional $1,000 into their IRA.
While you are getting ready to plan for the next tax-filing season, we recommend that you surround yourself with the right people so you will be aware of any small or major changes that you will need to be aware of. There are various moving parts every tax season and we want you to be prepared. For information on our services, please do not hesitate to contact us today.