The expiring Bush tax cuts aren’t the only laws worth watching for investors as the year ends. A number of new rules are kicking in next year that will allow workers to stash away more money in their 401(k)s and individual retirement accounts.
To keep up with inflation, the Internal Revenue Service announced this year that the annual limit on contributions to 401(k) plans is rising to $17,500 from $17,000. Annual contributions to IRAs, both traditional and Roth, are rising to $5,500 from $5,000, the first time since 2008 that the limit has gone up.
Comments
I told a family friend that without a pension a retiring couple would need a $3 million portfolio to retire in a modest amount of style and her jaw dropped. The math isn't that complicated ($120,000 a year seems like a comfortable retirement income, at a 4% first year drawdown is $120,000/0.04=$3million). I guess most people aren't good at basic math. I avoid the subject now, I'm tired of being the bearer of bad news.