IRA And 401(k) Contribution Limits Unchanged in 2014

You won’t be able to put more money into your IRA or 401(k) next year.

Since inflation has been so low this year (at least as measured by the powers that be), most contribution limits will be unchanged for 2014.

IRA Limits

In 2014, just like this year, you can put $5,500 into your Traditional or Roth IRA ($6,500 if age 50 or over).

401(k) Limits

Contribution limits for employer-sponsored 401(k), 403(b), and 457 plans will also stay the same at $17,500 per year ($23,000 if age 50 or over). See the special note below regarding Solo or Individual 401(k) plans.

SIMPLE-IRA Plans

Employees can defer up to $12,000 of salary in 2014, the same as in 2013.  Those age 50 and over can defer up to $14,500. The 3% employer match is in addition to these amounts. SIMPLE-IRAs are usually the best fit for small businesses with employees.

 SEP-IRA Plans

SEP-IRA limits do increase slightly from $51,000 in 2013 to $52,000 in 2014, but these plans are usually favored only by those with high salaries and no employees.

Solo 401(k) Plans

Solo, or individual, 401(k) plans are a bonanza for business owners looking to save and deduct big contributions. Sorry, but these plans are only available to those who have no employees but themselves and possibly a spouse. Limits are $52,000 ($57,500 for those age 50 or over) split between salary deferrals and employer profit-sharing contributions.

Attention small business owners!

Nowadays, there’s no excuse not to offer a retirement plan.

For most plans, there are no administrative or maintenance costs, and no burdensome “testing” or annual reports.

You might even earn a tax credit for setting up a new plan!

Most of the money is contributed by employees, not the owner, and all contributions are tax-deductible.

Offering a retirement plan helps you attract and retain employees, and play catch-up with your own retirement nest egg.

Some plans can still be set up before year-end (if not, you can get a jump on January 1), which means a sure-fire way to cut your 2013 taxes.

 

About Mari Adam

Mari Adam, Certified Financial Planner™ and President of Adam Financial Associates Inc, has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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