The beginning of a new year is a great time to review your financial plan, including your goals for retirement savings. By setting your goals early in the year, you can save for them throughout 2020 and reduce the pinch that is sometimes felt when people try to “make up for lost time” later in the year. Below are the limits for different retirement plans in 2020 that you can use to inform your goal setting for the upcoming year.
| Retirement Plan | 2019 Limit | 2020 Limit | Age 50 or older catch up |
|---|---|---|---|
| Traditional IRA | $6,000 | $6,000 | an additional $1,000 |
| Roth IRA | $6,000 | $6,000 | an additional $1,000 |
| SIMPLE IRA | $13,000 | $13,500 | an additional $3,000 |
| 401(k), 403(b), 457 plans | $19,000 | $19,500 | an additional $6,500 |
Action items
As you set your retirement savings goals for 2020, be sure to consider the following:
- Do you need to to adjust your monthly contributions to your retirement savings account in order to take full advantage of the limits above and any contribution matches your employer might offer?
- Do any of your family members need to have a retirement account created? When considering this, most think of their spouses, but don’t forget your children too.
- Have there been any changes in 2019 that might affect your overall retirement savings plan? Should you adjust the ratio of Roth to traditional savings in tax advantaged retirement plans? Can you make use of other tax advantaged savings opportunities such as a Health Savings Account?
It’s not too late for 2019!
Finally, keep in mind that it may not be too late to save in 2019. Some savings plans such as traditional and Roth IRAs allow you to make contributions for the 2019 tax year up to April 15, 2020. If you would like more information about crediting tax advantaged retirement savings contributions made in 2020 to your 2019 tax year, please contact our office and we would be happy to help.