Pennysaverblog – Page 172 – Smart Finance and Money Saving Tips

Investing

Changes to 401 (K) And IRA Contributions For The Year 2014

Image Credit: money.usnews.com

The year 2014 will bring some less significant changes to 401(k) and IRA contribution rules. The changes will mainly impact the IRA contribution scheme. The shared changed for retirement plans that brings a bigger saver’s credit threshold is sure to be welcomed by a larger population of taxpayers.

IRA Contribution Limits

The IRA contribution limits will stay the same as 2013 with the worker’s contribution amount fixed at $5500 in 2014. The individuals aged 50 and above can contribute an additional $1000 as a catch up contribution.

The changes in the IRA income limits are as follows:

1) Workers who are entitled to a workplace retirement plan with modified adjusted gross income of $60,000 to $70,000 will not be eligible to file for a tax deduction. The range has been increased from $59,000 to $69,000 last year.

2) Married couples with workplace retirement plans in the range of $96,000 to $116,000 per household will not be able to file for tax deduction as well.

3) Workers who do not have workplace retirement plans, but are married to a spouse who has one, and if their shared income is between $181,000 and $191,000, are not eligible for tax deduction. This range has been increased by $3000 from 2013.

Higher Roth IRA Income Cutoffs

A major highlight of the IRA contribution changes for the year 2014 is the higher Roth IRA income cutoffs. Workers can earn $2000 more ($3000 for couples) in 2014 and still be qualified to contribute towards Roth IRA. Investors who earn more than the adjusted gross income (AGI) phase-out range for Roth IRAs ($114,000 to $129,000 for singles and heads of household and $181,000 to $191,000 for married couples) may still be able to convert traditional IRA assets to a Roth. The only hitch is that the conversion of traditional IRA assets to Roth might be taxed.

Limits for 401(k) Contributions

The limits for 401(k) contributions remain unchanged from 2013. Taxpayers can contribute up to $17,500 to their 401(k), 403(b), most 457 plans and the federal governments Thrift Savings Plan in 2014. The catch-up contribution limit for employees aged 50 and older has been left unchanged at as well $5,500.

Overlapping Changes

A major change in the tax cut off that it will benefit the low and moderate income workers saving in 401 (k)s and IRAs with the eligibility to claim a tax credit of up to $1,000 for individuals and $2,000 for married couples. Couples will be eligible to claim the saver’s credit until their AGI exceeds $60,000 (which is $1,000 up from last year’s $59,000). Moreover, the heads of households can claim the saver’s credit until their AGIs exceeds $45,000, while individuals can claim it until their AGIs reach $30,000.

According to a statement released by the US Internal Revenue Service, the reason for the minor changes in the 401 (k) and IRA rules is due to the fact that inflation, as measured by the consumer price index, did not meet the statutory thresholds for their adjustment. Hence, the contribution caps have not been raised significantly for the year 2014.

About the Author

Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He regularly blogs at Biggerpocket, SocialMediaToday, MoneyForLunch & his own blog where he focuses on retirement planning, investment, securing future related topics.

January 19, 2014

Household

Home Repairs You Can Do Yourself To Save Money

If you are a homeowner, there are going to be occasions when you’ll need to have some repair work done inside of your house. You might need maintenance done to your HVAC unit. Or you might need some plumbing or electrical work done. Or, you might even need some shingles added to your roof. Whatever the case may be, in order for your repairs to be done the right way, it’s usually going to require having some money.

If you’re like us, we’re pretty sure that when it comes to home repairs, you want to do all that you can to save as much money as possible. That’s why we wanted to provide you with five of our favorite tips for how you can get what you need done around the house without paying someone else to do the work. Check these out below:

January 18, 2014

Banking

5 Major Benefits Of Joining A Credit Union

Credits unions are often a hazy concept to people who have either never heard of them, or to people who buy into the idea that credit unions aren’t real banks. When it comes down to it, the major banking institutions want people to believe that credit unions aren’t real banks – or else people would start flocking to credit unions. However, the truth is that credit unions can often be a welcome alternative to the big banking experience and some credit unions, like 1st Financial Federal Credit Union, can offer benefits and advantages that the big banks just can’t offer. Here are five major benefits of joining a credit union.

You matter. When you start an account with a credit union, you essentially become a member. While big banks have multiple stock holders and executives, a credit union only has the people banking with their institution. This means that when you walk into a credit union, you get treated with the utmost respect and the money you have invested in your accounts is respected too – often with no hidden fees. Most big banks are riddled with hidden fees.

January 17, 2014

Money Saving Tips

Why Is Saving Money So Hard?

I was thinking about saving money these days and the reason why I think it is so hard for most people. One reason is, of course, media and advertisements that have everyone thinking that we have to have the next best thing that comes out. But there is something else that plays a big part in our inability to save money: I believe that we all think too large these days.

Back when I was a kid there was a saying, “A penny saved is a penny earned.” We picked up pennies with joy because we could get two pieces of candy for a penny. I know that the penny does not mean anything anymore, and there are even discussions about doing away with the penny. The day that happens I will be heartbroken! It may sound silly, but I grew up in a time when there was still a lot of value to the penny. This, I believe, is where our downfall starts.

Start Saving Now – No Matter How Little You Have

We think that if we do not have $100 or more to put in savings that it is not worth putting in anything. But just like the piggy banks I had as a kid filled up in just a few months with pennies, our bank accounts could look a whole lot better over a few months if we just put even $20 in for every paycheck. How about we change the slogan to, “A dollar saved is a dollar earned”? To many of us, that is also too small a denomination to matter. I say we should give it a try.

January 15, 2014

Household

First Time Home Buyers – 5 Home Repair Budgeting Tips

Being a homeowner is certainly a great accomplishment. It symbolizes independence, security and having a piece of the American Dream. It also means that when it comes to the maintenance, repairs and renovations required for your house, being that you’re responsible for all of its needs, we’re sure you’re constantly in search for ways to take care of your home without breaking your budget in the process.

If so, you’re in luck. We have provided you with five of our favorite home repair budgeting tips for first-time buyers below:

Conduct an Energy Audit

One reason why a lot of people find themselves spending more money on house repairs than they would like to is because they aren’t aware that something is wrong in their house until it is too late. Take their plumbing, for example. If there is a pipe that’s leaking in their basement that they aren’t aware of, it might take an electrical short or even flooding for them to realize it. One way to stay abreast of what’s going on in your house is to conduct an energy audit. That will show you how to test your appliances, check for water and air leaks and even inspect your insulation. For tips on how to do your own energy audit, visit Energy.gov and put “DIY energy audit in the search field”.

January 13, 2014

Older Posts

Newer Posts