Did you know the contribution limits for 401Ks and IRAs increased for 2013? With the Presidential Election in November and all the talk over the Fiscal Cliff, many people missed this announcement out of Washington.
For 2013, the 401K and 403(b) annual contribution limits went from $17,000 to $17,500. The annual contribution limits for Traditional and Roth IRAs also rose from $5,000 to $5,500.
If you are age 50 or older at any time in 2013, you are eligible to contribute a catch-up amount of an additional $5,500 for 401Ks and 403(b) s. For IRAs, the catch-up amount is $1,000.
You should do the following:
- Make adjustments to your paycheck to meet new limit for 401Ks and 403(b)s
- Make your Traditional IRA or Roth IRA contribution now
Now is the time to adjust the 401K contributions in your paycheck. If you make these changes now, the increase in contributions can be spread out over the full year verse playing catch up at the end of the year. If you are not able to make the maximum allowable annual contribution, you should contribute as much as possible. The minimum you should contribute is enough to get the company match. This is free money, so do not give it away!
Have you made your 2013 Traditional IRA or Roth IRA contribution yet? If not, you should go ahead and contribute now. This way you get the entire year for your dollars to grow.
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Author
Isaac is a Fee-Only (no products sold) Certified Financial Planner® Practitioner. Isaac founded Stalwart Financial Planning with offices in Fayetteville NC and Durham NC. Isaac provides comprehensive planning and investment management services to individuals from all walks of life. Isaac can be reached by phone at 910-867-8464, or by email (iallen@StalwartPlanning.com). Visit him at Stawart Financial Planning www.StalwartPlanning.com.