Acclaro Blog

Archive for the ‘Retirement Planning’ Category

2012 Contributions & Deductions Guide

Wednesday, February 6th, 2013

2012 IRA Contribution Limits Guide
Equity Trust’s Guide to 2012 IRA Contribution Limits

Retirement Plan Limits Increased

Wednesday, February 1st, 2012

Recently, the IRS announced that retirement plan limits had been increased for 2012.  For the preceding three years all limits had remained constant.  If you are trying to maximize your retirement savings, these changes will be important to consider.

401k Contributions: The annual amount you can contribute to your 401k plan has increased to $17,000. per year.  That calculates to $1,416.66 per month.  Remember, 401k contributions are taken out of your pay check before taxes, so the deduction is less in actual out of pocket cost.  Combine that savings with any match your employer might make and you may have the best possible vehicle for retirement savings.

Defined Contribution Annual Limit: This is the amount you are allowed to contribute to your plan from all sources.  This would include: 401k contribution; employer match; catch up; profit sharing contribution, etc.  When you add up all of these sources the amount can not exceed $50,000.  That is an increase of $1,000. from current levels.

Catch Up Contributions: Catch up contributions, the amount individuals over age 50 can contribute to “catch up” (because they did not contribute enough when they were younger) has not been changed and remains at $5,500. per year.

See your Human Resources Department to update your retirement savings contribution instructions.

There are several other changes that have taken place: such as definition of highly compensated employees and key officer compensation.  If you wish a complete list of the changes please contact us at Acclaro Wealth Management.

This information is not intended to be a substitute for specific individualized tax advice.  We suggest that you discuss your specific tax issues with a qualified tax advisor.

A Great Investment Opportunity

Wednesday, January 19th, 2011

It’s that time of the year when we start thinking about tax season and wishing we had ways to reduce our tax debt. Participating in your company sponsored retirement plan will help for next year. So be proactive in 2011, get started in your plan or look at increasing your contributions. Here are three reasons to participate in these plans:

1.  Social Security Alone Will Not Do The Job
Don’t plan on Social Security to pay your retirement bills. The rule of thumb is that Social Security probably represents only 40% of your retirement needs. In 2010, the average monthly benefit for a retired worker was about $1,164. This won’t buy the kind of retirement most Americans dream about. When you participate in your retirement plan, you take control of supplementing Social Security.

Visit the Social Security Administration website for more information about the retirement benefit you can expect.

2.  Tax Savings
There are two basic types of retirement plans offered by companies:

  • Before-Tax Contributions:  You save money today when you contribute because the money going into your account has not been taxed.You are taxed when you withdraw your money in retirement, when your tax bracket should be lower. By postponing taxes until you take withdrawals, you have more money working for you.
  • After-Tax Contributions:  Commonly called Roth accounts, these contributions are taxed before you invest them. However, they are not taxed when they are taken as qualified withdrawals

In addition, retirement plan earnings aren’t taxed every year, so you could benefit from having more money in your account growing through compounding. Check with your employer to find out which contribution types your plan offers.

3.  Your Employer May Help
Does your company offer matching funds as an incentive to encourage employees to contribute? If your employer does, take it! It’s free money. Try to contribute at least enough to get the full match.

If you do not have access to a company sponsored plan you can make contributions to IRA’s. If you are self-employed consider setting up a SEP or an individual 401k.