Increasing Your Nest Egg in 2014

Now that 2013 is behind us, it’s time to start gathering your tax information and move forward in 2014, particularly with your nest egg.  This is also the time to review and consider retirement plan contributions. The best move is contributing the maximum you’re allowed to an employer-sponsored defined contribution plan, because the contributions are typically pretax.  Secondly, the plan assets can grow tax-deferred; meaning you pay no income tax until you take distributions. Finally, your employer may match some or all of your contributions pretax.

Also, you can 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.  Also, there are Roth options to consider as well.  The contributions aren’t pretax, but qualified distributions are tax-free.  Additionally, you can still contribute to IRA’s up to April 15, 2014 for 2013 contributions.

Retirement plan contribution limits in general did not go up in 2014, but again, now is the time to consider contributing more this year if you’re not already making the maximum contribution. If you are already maxing out your contributions but you turn age 50 in 2014, you can take advantage of putting away more this year by making “catch-up” contributions.

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

If you have questions or need assistance in evaluating retirement options or tax planning needs, please contact Anders or your tax advisor.