retirement

Push your retirement savings to the limit

Don TaylorDear Retirement Adviser,
I'm 58 years old and have a 403(b) plan. At the same time, I opened a Roth individual retirement account about three years ago. As it stands, I'm contributing a total of $6,000 a year to each account. Is that OK or am I allowed only $6,000 for all retirement accounts including the one at work?

Thank you,
-- Ruth Retirement

Dear Ruth,
Contribution limits are separate for individual retirement accounts and 403(b) plans. Since you're more than 50 years old, the limits are increased to include the ability to make so-called catch-up contributions.

For now, you are well below the contribution limits for 403(b) plans. The limits on elective contributions, not including catch-up provisions, are $17,500 in tax years 2013 and 2014. Limits for 2012 were $17,000 and $16,500 for 2009-2011.

Contribution limits for IRAs in 2013 and 2014 are the same: $5,500 plus an additional $1,000 in catch-up contributions for a total contribution limit of $6,500. That's provided you have at least that much in taxable compensation for the year. The combined limit was $6,000 for the 2010-2012 tax years.

There are income limits on contributions to a Roth IRA. Since 2010, you've had the ability to make non-deductible contributions to a traditional IRA and then convert to a Roth IRA. Participating in a qualified retirement plan at work can limit the tax deductibility of contributions into a traditional IRA. It doesn't limit the ability to make non-deductible contributions up to the contribution limits. That's provided you have enough sufficient taxable compensation to contribute this much.

If your employer offers matching contributions, you should contribute up to the limit of the employer match before switching over to contribute to the Roth IRA. Think of the employer match as free money. You don't want to avoid getting what you are entitled.

Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.

Ask the adviser

To ask a question of the Retirement Adviser, go to the "Ask the Experts" page and select "Retirement" as the topic. Read more Retirement Adviser columns and more stories about retirement.

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.

advertisement

Show Bankrate's community sharing policy
          Connect with us
MORTGAGE HOME EQUITY AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed 4.23%  0.02 4.25%
15 year fixed 3.23%  0.02 3.21%
5/1 ARM 3.45%  0.11 3.56%
 
View Rates in your area Next
Product Rate Change Last week
30K FICO-based HELOC 4.36%  0.01 4.35%
50K FICO-based HELOC 4.06% --0.00 4.06%
100K FICO-based HELOC 3.91% --0.00 3.91%
 
View Rates in your area Next
Product Rate Change Last week
60 month used car loan 2.79%  0.10 2.69%
48 month used car loan 2.98%  0.06 2.92%
60 month new car loan 3.23%  0.05 3.18%
 
View Rates in your area Next
Product Rate Change Last week
1 Year CD 0.94%  0.03 0.91%
2 Year CD 1.13%  0.03 1.10%
5 Year CD 1.76% --0.01 1.77%
 
View Rates in your area Next
Product Rate Change Last week
Balance Transfer Cards 15.71%  0.01 15.70%
Cash Back Cards 16.41%  0.01 16.40%
Low Interest Cards 10.86% --0.00 10.86%
 
Next
advertisement
CD & INVESTING NEWSLETTER

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

Blog

Jennie Phipps

Why using an adviser pays off

401(k) participants who work with an adviser save more for retirement, a new study finds.  ... Read more

advertisement
Partner Center
advertisement

Connect with us