With the New Year comes a multitude of lofty resolutions to make next year better than the last.
While we can’t help you get in more steps or go skydiving, we can help you establish savings strategies to put away the most you can towards retirement and save on taxes. The IRS has increased both contribution limits and income thresholds for 2020 and it’s important that you’re aware so you can maximize your savings and set up a strategy for the new year. The first bastion for retirement is your employer-sponsored 401(k) plan with a new 2020 deferral limit of $19,500, and $26,000 for those 50 and over. Be sure to contact your Human Resources or Payroll department to up your deferrals to the new maximum.
If an employer-sponsored plan isn’t available to you, you can make an IRA contribution to defer taxes on your income; that limit will remain the same at $6,000 with an extra $1,000 catch-up contribution for those 50 and over. Even if you are participating in your 401(k) plan, you can choose to make an after-tax contribution to your IRA that will allow those funds to grow tax-deferred until retirement. You have until the tax-filing deadline (or until you file) to make your contribution for 2019. Start your new year retirement savings off strong with both 2019 and 2020 contributions to begin growing your retirement savings now. Even after you’ve exhausted the tax-advantaged avenues available to you, it’s always wise to establish recurring contributions to your taxable brokerage account. You’ll thank yourself for setting up an aggressive savings plan once it’s time to retire. With three interest rate cuts in 2019, and none planned for 2020, your savings account at the bank is likely paying next to nothing.
We will work with you to optimize your saving strategy for tax-efficiency and long-term growth.