If you aren’t participating in your company’s retirement plan (i.e. a 401(k)), then you are really missing out. Not only is it a great way to save for retirement, there may be numerous perks and benefits that you may be giving up. For one, if your company offers contributing matching, you could be leaving extra money on the table. Even if the match is only a small amount–such as 3%–that’s still better than nothing and can go a long way over a long period. Being an active participant in an employer retirement plan can also potentially allow you to deduct a traditional IRA contribution from your taxes should you fall within the proper range. A deduction of a contribution on your taxes doesn’t have to do with your salary or Modified Adjusted Gross Income (MAGI). Furthermore, you don’t have to contribute a large amount to your retirement plan nor do you need to be a participant for a long period of time. So long as you make a contribution and are active for the required period each year, then you will be considered an “active participant” for tax purposes. Even if you don’t intend to use your employer retirement plan as your main source of retirement savings, it can still be a good idea to at least set up an account and contribute a little each year. If you have questions about your company’s retirement benefits, you should speak with the benefits manager or human resources contact where you work. So, are you an active participant?
2019 is less than two months away. With the new year will come new changes regarding Roth IRA contributions. The good news is that Roth IRA contribution limits will go up in 2019, which will provide an opportunity to save more for retirement. While the jump won’t be huge–the new limits will be $6,000 for those under 50 and $7,000 for those over 50–they will provide a chance to put away an extra $500 compared to this year. However, that news is tempered by the fact that there are still income qualifications that need to be met for you to even make a contribution to a Roth IRA. for 2019, if you are single and your Modified Adjusted Gross Income (MAGI) is above $137,000 you cannot make a Roth IRA contribution. If you are married and filing jointly, you cannot make contributions if your MAGI is above $203,000. If you find that your income is above those limits, you may want to consider a traditional IRA, which has no income limitations for contributions. If you have questions about Roth IRAs and contributing to them, you should talk with a certified financial planner.