TAX, ACCOUNTING & CONSULTING
contact: lrust@nathans-rust.com
May 21, 2012
Get the most benefit from retirement plans
What do you want to be when you retire?
You and your friends may have asked each other a similar question in high school. No matter what your age is now, looking ahead to the future is important — and the retirement plans you participate in have a big impact on that future.
Here are tips for getting the most benefit from retirement plans.
- Maximize your contributions. For 2012, the maximum amount you can contribute to your 401k plan when you're under age 50 is $17,000. If the plan allows catch-up contributions, which are available when you're age 50 or above, you can contribute an additional $5,500.
For SIMPLE plans, the maximum amount you can contribute for 2012 is $11,500 before catch-up contributions. The maximum catch-up contribution for a SIMPLE plan is $2,500.
How you benefit: Contributions are not subject to federal income tax, so amounts you put in your retirement plan reduce your taxes. In addition, income earned in the plan is not taxed until you begin taking withdrawals.
- Take advantage of employer matching contributions. The contribution limits mentioned above do not include amounts your employer can add to your account. "Matching" contributions are based on a percentage of your wages, and can raise the annual maximum contribution limit to as much as $50,000 for 2012.
What's the benefit? Matching means when you designate a certain amount from each paycheck as a plan contribution, your employer contributes, or matches, that amount up to a limit set by your plan documents. The result? Your retirement savings grow faster at no current cost to you.
- Another wise retirement plan move: Participating in all plans available to you, such as opening an Individual Retirement Account in addition to your 401(k) or SIMPLE.
Give us a call for more information about your retirement plans. We're here to help you maximize the benefits you receive, both today and in the future, so you can achieve the life you envision in retirement.
