It’s time to start thinking about 2014 retirement plan contributions. Contributing the maximum you’re allowed to an employer-sponsored defined contribution plan is likely a smart move due to:

  • Contributions typically being pretax
  • Plan assets can grow tax-deferred — meaning you pay no income tax until you take distributions
  • Your employer may match some or all of your contributions pretax

Also consider contributing to a traditional IRA. If you participate in an employer-sponsored plan, your IRA deduction may be reduced or eliminated, depending on your income. But you can still benefit from tax-deferred growth. You could also consider your roth options as well. Contributions aren’t pretax, but qualified distributions are tax-free.

Retirement plan contribution limits generally aren’t going up in 2014, but consider contributing more this year if you’re not already making the maximum contribution. And if you are already maxing out your contributions but you’ll turn age 50 in 2014, you can put away more this year by making “catch-up” contributions.

Below are the 2014 retirement plan contribution limits:

 

Type of Contribution

2014 Limit
Elective   deferrals to 401(k), 403(b), 457(b)(2) and 457(c)(1) plans

$17,500
Contributions to SIMPLEs

$12,000
Contributions to IRAs

$5,500
Catch-up contributions to 401(k), 403(b), 457(b)(2) and 457(c)(1) plans

$5,500
Catch-up contributions to SIMPLEs

$2,500
Catch-up contributions to IRAs

$1,000

 

For more ideas on making the most of tax-advantaged retirement-savings options in 2014, contact our tax specialists in Michigan, Houston or Ft. Lauderdale.