Should You Roll Over A Retirement Plan Distribution

retirement plan redistribution

Different circumstances arise that call for one to rollover their retirement plan. You may be left with little time and tough decisions to make. The decisions you make on whether you rollover your retirement plan and how you rollover your retirement plan distribution can have profound effects on several areas of your life, including how much you are taxed. Whether or not you rollover your distribution is not a decision to be taken lightly.  Continue reading

How I Save Costs as a Sports Fan

sports-fan-saving-costs

A study has found that being a fan of a professional sports team can cost you almost $ 86,453 over a lifetime. Fans of sports like football, motor racing or soccer can expect to pay over $1,294 a year for entry and entrance prices, transport and retail expenses. For some, the expense is even greater with more than a fifth reporting that they spend an average of about $267 a year. Continue reading

How to Live Below Your Means

Living Below Your Means
Living Below Your Means

With rising prices ,ever increasing consumer wants, and it becomes more challenging for many individuals to live below their means. Credit card bills, keeping up with the Joneses, and other unnecessary expenses are among some of the reasons many individuals find it exceedingly hard to live below their means, finding themselves unable to spend less than the amount of money they are able to make each month. Continue reading

How to Save Money With Your Bank Account

As history has shown, a bank account isn’t always the best way to build a nest egg. Inflation and sub-par banking practices have forced many to adopt other mediums of finance such as cryptocurrencies. Many, however, still believe that their bank account is a secure medium for saving. To maximize the benefits of maintaining a bank account, several methodologies (albeit unconventional) must be adopted. Continue reading

How to Lower the Costs of Travel

Lowering the Costs of Travel
Lowering the Costs of Travel

Everyone loves to travel but not everyone can afford the luxury of time or the monetary costs of journeying through “unchartered” lands. With increasing competition in the travel industry, travel has become more affordable. With a few hours of desktop research, a few calls, and some good old budgeting, one can get ready for that next trip to Dubai. Continue reading

2018 Roth IRA Contribution Limits

2018 Roth IRA Contribution Limits

We all know that we should be saving for retirement.  Whether you have a 401k, a pension, or an IRA, retirement accounts give individuals great tax breaks to help them prepare for their golden years.  It is often reported that people misjudge how much they will need in retirement.  The rule of thumb for a long time has been you need your retirement income to supplement 80% of your income when you were working; however, this number is different for everyone based on a number of factors.  One thing is certain.  Maxing out your retirement accounts never hurts.  For 2017, the IRA contribution limits stayed the same as they were in 2016.  You could contribute up to $5,500 towards your IRA, and if you were 50 or older you can contribute an additional $1,000 bringing your total yearly contribution limit to $6,500.  The 2018 Roth IRA contribution limits won’t be released until October of this year, but we can speculate what they might be.

Each year, the Internal Revenue Service (IRS) sets the income and contribution limits for IRA’s.  The last year that the IRS raise the contribution limit was for the tax year of 2013.  The contribution amounts for traditional and Roth IRA’s are the same each year.  They are evaluated and raised based on inflation.  The IRS will raise contribution limits in increments of $500.  This means that the next time they are raised, people under the age of 50 will be able to contribute a maximum of $6,000 a year to their IRA, while people over the age of 50 will be able to most likely contribute $7,000 a year.  In order for this raise in contribution limits to take place, inflation would need to be around 9% over a period of time for this to occur.

9% of $5,500 = $495

This would be near the $500 increment level the IRS would like to see to raise the contribution limits.

Since the last time the IRS raised contribution limits in 2013, inflation has risen by about 6.5% based on data tables.  This means that another 2.5% increase in inflation would be needed for the IRS to raise the contribution limits for traditional and Roth IRA’s.  With all of this being said, the most likely scenario is that 2018 Roth IRA contribution limits will remain unchanged.  A more likely scenario would be a raise in the contribution limits for 2019.

Despite the fact that the 2018 Roth IRA contribution limits won’t change, the IRS will still probably change some limits.  The limit they will change, and almost always do, is the income limits associated with eligibility for participation in IRA’s.  For 2017, the IRS raised the income phase-out limit to $118,000 for single earners and $186,000 for married, joint filling earners, raises of $1,000 and $2,000 respectively.

There are still many months to wait until the IRS reveals their 2018 Roth IRA contribution limits.  An increase in the limit would allow individuals to save an additional $500 a year in a tax-advantaged account.  Although an increase is doubtful, we can still remain hopeful.

Budget Smart, Invest Wise