Most working professionals have access to a 401(k) plan or a 403(b) plan at work.? Amounts contributed to these plans generally reduce your taxable earnings and always grow tax deferred.? You can contribute up to $19,500 into a 401(k) or 403(b) plan through salary deferrals in 2020.
Anyone 50 or older by December 31, 2020 can contribute an extra $6,500 into their 401(k) or 403(b) plan through salary deferrals next year, for a total annual contribution of $26,000.? That is an increase of $1,000 over what was allowed during 2019.
Many smaller employers offer their staff access to SIMPLE/IRAs instead.? SIMPLE’s work just like 401(k) plans, which means it’s up to you to fund the bulk of this retirement savings account through salary deferrals.? For 2020, the maximum contribution into your SIMPLE increases to $13,500.? Anyone 50 or older by December 31st can sock away an additional $3,000 in 2020, for a total annual contribution of $16,500, up $500 from 2019.
And if you are self-employed, you can contribute up to 20% of your net self-employment income into a SEP IRA.? The maximum contribution into your SEP IRA for 2020 increases to $57,000, up $1,000 from 2019.
Re-Set Your 2020 Budget:? Most people won’t be able to max out these tax-advantaged retirement options unless they get on a budget and put away a set amount of money each month.? With 2019 winding down, now’s the time to start thinking about resetting your monthly retirement savings goals for 2020.
2020 Maximum Retirement Account Contributions:
Retirement Savings Option
|Under the age|
|50 or older by December 31st|
401(k) or 403(b) deferrals
SIMPLE IRA deferrals
IRA or Roth IRA