fbpx

How to Grow Your Nest Egg Faster

Nest eggContributing to a retirement account qualifies you for tax breaks and employer contributions, both of which will grow your retirement much more quickly.

US News explains how to take full advantage of the 401(k) and individual retirement account perks you're eligible for in 2016 in "How to Maximize Your Retirement Accounts in 2016."

Max out your 401(k). You can contribute up to $18,000 to your 401(k) plan in 2016, which means saving $1,500 per month. Income tax isn't due on this money until it is withdrawn from the account.

Make catch-up contributions. Workers age 50 and older can contribute an additional $6,000 to a 401(k) plan in 2016, for a total contribution of $24,000. Hitting this 401(k) limit means you need to save $2,000 per month. If you do that, you'll reduce your tax bill by $6,000 if you are in the 25% tax bracket, and $8,400 if you pay a 35% federal income tax rate.

The employer match. If your company provides a 401(k) match up to 6% of pay, set up withholding for that amount. If you get a raise next year, increase your savings rate now so your take home pay is identical. Place the extra money in your company retirement plan. You won't even notice the difference!

Take advantage of IRAs. In addition to saving in a 401(k), you can defer income tax on another $5,500 that you contribute to an IRA next year. Remember that if you're 50 or older, you can contribute an extra $1,000 for a total of $6,500.

Consider a Roth. Roth IRAs have the same contribution limits as traditional IRAs, but they are treated differently for taxes, as there's no tax deduction for Roth IRA contributions. Investment earnings in the account aren't taxed, and withdrawals after age 59 1/2 are tax-free.

Claim the Saver's Credit. If you save in a retirement account and your adjusted gross income is less than $30,750 for individuals, $46,125 for heads of household, or $61,500 for married couples, you may be able to claim the saver's credit. Contributions of up to $2,000 ($4,000 for couples) could earn you a tax credit worth between 10% and 50% of your retirement account deposit.

Reference: US News (November 23, 2015) "How to Maximize Your Retirement Accounts in 2016"

 

Like this article?

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on Linkdin
Share on pinterest
Share on Pinterest

Leave a comment

LIKE THIS POST?

We have a LOT more where that came from!

We hate spam too. We will never share or sell your information.

Call Now ButtonCall Us Now https://jsfiddle.net/7h5246b8/

Request a free consultation

We hate spam too. We will never share or sell your information.

We've been putting together as many resources as possible so that we can continue to help:

  • If you’re a current client with a signing appointment or a prospective client with a consultation and would prefer that meeting take place in your own home, we can accomplish that with a little bit of pre-planning on our part and with the addition of a laptop, smartphone, tablet or other computer in your home to facilitate this virtual meeting. For those of you that need to sign legal documents, that too can be accomplished with the use of a webcam (FaceTime etc.), so that we can witness and electronically notarize all of your important legal documents.
  • We launched the rollout of our on-demand webinar early so that new clients and our allied professionals can view the important component parts of ‘an estate plan that works’ at their convenience.  That is available on our website.
  • Live video workshops will be produced as quickly as possible and certainly ahead of our previous schedule; we will keep you posted as these events become available. Given the ‘boutique’ nature of the firm, we rarely have more than ten people in our office including team members at any one time. During this period of ‘social distancing,’ we promise to have no more than 8 people at any time.   This allows us to comply with the Governor’s directive to limit in-person gatherings.
  • The best way to communicate with us is still by phone during regular office hours of 8:30 to 5:00, Monday through Friday, or, you can email any of our team members (that is, their first name followed by @zarembalaw.com).  We will respond to these emails as quickly as possible.
  • Please continue to follow the directives of our local, state, and federal agencies. For your health and in consideration of our team who is assisting you, if you’ve scheduled an office appointment or planned to drop off paperwork and are experiencing a fever, dry cough, or shortness of breath, please contact your primary care doctor for guidance and then our office to reschedule.

Thank you, Walt and the Zaremba Team

Coronavirus/Covid-19
Update to our Process

The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.