March 2018 Volume 16, Number 3 | |||||
Kicking it Up a Notch — Retirement Contribution Limits IncreasedThat’s just one of the many changes to retirement plans for 2018.
This year employees can contribute $500 more to their federally legislated retirement funds. The federal government raised contribution limits to $18,500 for 401(k), 403(b), most 457 plans, and the Thrift Savings Plan. The adjustment was made to keep up with the cost of living. Participants age 50 or older, by the end of 2018, may make additional catch-up contributions of $6,000, meaning older savers may defer up to $24,500 into their retirement plan. 401(k)
A 401(k) plan allows employees to contribute pre-tax dollars from their paycheck to an employer-sponsored retirement plan. The employee doesn’t pay taxes until the money is withdrawn. Saver’s Tax Credit
The Saver’s Tax Credit is a non-refundable income tax credit that could reduce federal income tax liability to $0 for employees who have a low to moderate income and are investing for their retirement through an IRA , 403(b), 457(b) and/or 401(k) plan. The Saver’s Credit can be claimed along with the tax deduction for participating in a 401(k) or IRA. 403(b) A 403(b) plan is a retirement plan for certain public school employees, ministers and employees working for tax-exempt organizations. These employees can invest in either annuities or mutual funds. They don’t pay income tax on allowable contributions until they retire and begin making withdrawals from the plan. 457 A 457 plan is an employer-sponsored, tax favored retirement plan for state and local government employees and some nonprofit executives. Participants don’t have to pay a 10 percent penalty if they withdraw funds before age 59 and a half. Thrift Savings Plan
A Thrift Savings Plan is a retirement savings and investment plan for federal employees and members of the uniformed services. |
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This Just In ... Retirement Policy Tweaks Considered Stepping into Lower Drug Costs Ten Reasons to Motivate Employees to Use Their Employee Health Benefit Portal Kicking it Up a Notch — Retirement Contribution Limits Increased Ways to Proactively Combat Mental Health Issues in the Workplace
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