Month: April 2014

Most of us who are middle-aged or older have competing demands on our financial resources: our children, our aging parents, and ourselves. How do we handle it all?

Pay yourself first: Start with yourself. Using your retirement funds to cover current expenses can threaten your financial security. So make a commitment to pay yourself first. Employer-sponsored 401(k) plans, Individual Retirement Accounts (IRAs), and variable annuities allow your investment earnings to grow, tax-deferred, until they’re withdrawn; this could mean your assets may grow faster than if you made the same contributions to a taxable account.

Education costs: If you have children, plan for their future. Estimate how much money they’re going to need for college, then consider whether they’ll qualify for financial aid, scholarships, grants, loans, and student work-study programs.

Subtract the amount he or she can get from other sources from the total amount required, then work with your financial advisor to develop an investment plan that will make up the difference.

Long-term care costs: Consider your parents’ finances. Do they have the resources to support themselves in a long-term situation? Do you, if they need your financial help? Contrary to popular belief, Medicare only covers about three months in a nursing home after a hospitalization, and Medicaid won’t cover nursing home costs until your parents have exhausted virtually all of their hard-earned personal resources. Careful planning can help you prepare, but it starts with finding out if your parents are prepared for such expenses. Your financial advisor can help.

f you are looking to add to your retirement nest egg, you may want to know more about the contribution limits for 2014. The Internal Revenue Service (IRS) sets different contribution limits for different types of retirement accounts, and keeping up with them can be difficult, as they tend to change each year. But the good news is: If you’re 50 or older, you can make additional catch-up contributions.

Below are listed the 2014 retirement plan contribution limits. You can make contributions for 2014 until the tax filing deadline of April 15, 2015.

If you are looking to add to your retirement nest egg, you may want to know more about the contribution limits for 2014. The Internal Revenue Service (IRS) sets different contribution limits for different types of retirement accounts, and keeping up with them can be difficult, as they tend to change each year. But the good news is: If you’re 50 or older, you can make additional catch-up contributions.

Below are listed the 2014 retirement plan contribution limits. You can make contributions for 2014 until the tax filing deadline of April 15, 2015.

Traditional IRAs and Roth IRAs:
Contribution limit: $5,500
Age 50 catch-up contribution limit:
$6,500

Deferred-contribution plans, such as 401(k), 403(b), and 457 plans: Contribution limit: $17,500
Age 50 catch-up contribution limit: $23,000

Simple IRAs: Contribution limit: $12,000
Age 50 catch-up contribution limit: $14,500

Note that these are just the contribution limits; there are also income limits. For example, you can only contribute to a Roth IRA in 2014 if your adjusted gross income (AGI) is less than $129,000 if you’re single, or $191,000 if you’re married and filing jointly. The amount you are able to contribute declines gradually once your AGI exceeds $114,000 for singles, and $181,000 for couples.

Savers’ Tax Credit: Don’t forget about the Retirement Savings’ Contribution Credit (The Savers’ Credit), which is an often-overlooked tax break that provides an additional incentive to those who wish to contribute to a retirement savings account. This is in addition to any tax break you already get for contributing to a retirement plan, and essentially it allows you to also receive a credit worth 10-50 percent of up to $2,000 in your contributions to a retirement plan. It’s well worth remembering, as it can reduce your tax bill by up to $1,000.

This article is not intended to provide tax or legal advice and should not be relied upon as such. Any specific tax or legal questions should be discussed with your tax or legal advisor.