How You Can Contribute More to Your 401(K) and Health Care Savings Account
“Wheel of Finance!” Wow! You nabbed a spot in the 401(k) game! So, why are you still spinning your wheels? You’ve been a contestant for a hot minute and you can’t figure out a way to put more money away for your retirement. Really? Now, don’t expect Vanna to turn this situation around; she’s too busy with her style squad. But you should know that the category is “savings” and if you want to solve this puzzle, the IRS may help you get to your jackpot.
Uh, oh, that sound means that time is running out. We, at Achieve Financial Group, are going to give the wheel a final spin and then we’ll have five seconds to let you know what cash and prizes you’ll win. Hey, don’t worry. You won’t miss your turn. Just listen to the announcer and you’ll hear what you can expect from the IRS in the bonus round.
- They’re raising limits on contributions to 401(k), 403(b) and 457 plans. The annual limits on contributions are up to $18,500 and people over 50 can make catch-up contributions.
- Changes for self-employed 401(k) plans, or solo 401(k)s. The self-employed can set up a 401(k) plan. They can also make an additional contribution that’s a percentage of net profit.
- New income levels for IRA contributions. People over 50 in 2018 can make an additional catch-up contribution of $1,000 for a total annual IRA contribution of $6,500. The IRS also increased the income levels used for determining eligibility to make deductible contributions to traditional IRAs, contribute to Roth IRAs and to claim Savers Tax Credit.
- New contribution limits for health savings accounts, or HSAs. The 2018 annual contribution limit that individuals with single medical coverage can contribute to a health saving account is $3,450.
Pat yourself on the back! You don’t have to buy a vowel for any I.O.U.s and you won’t land on “bankrupt.” In fact, the only letters you should be concerned with are the ones updating you on your 401(k) savings!