Retirement Contribution Limits for 2014
The 2014 contribution limits will remain the same as they are for 2013.
The following limits are:
– $17,500 to a 401(k), 403(b), 457 or the federal government’s Thrift Savings Plan. In addition, you can add as much as $5,500 more in catch-up contributions if you’re 50 or older in 2014.
– $5,500 is the annual contribution limit for traditional and Roth IRAs. If you are 50 or older in 2014 you can add an additional $1,000.
__________
Additionally, the income limits determining who can contribute to Roth IRAs are increasing very slightly.
– $129,000 if single
– $191,000 if married filing jointly
You can contribute to a Roth IRA in 2014 only if your adjusted gross income is less than what’s listed above. The amount that you can contribute starts to decline — or phase out — for singles earning more than $114,000 and couples earning more than $181,000.
The income limit defining who can claim the savers’ tax credit (officially called the Retirement Savings Contribution Credit) is also increasing slightly. To qualify for the credit, your 2014 adjusted gross income must be less than $60,000 for married couples filing jointly, less than $45,000 for heads of household, and less than $30,000 for singles or married individuals filing separately. See Take Advantage of the Retirement Savers’ Tax Credit for more information about the rules.
–Written on November 19, 2013.
____________________
*The articles on this blog are for education and entertainment purposes only and should not be taken as financial or legal advice. See legal disclaimer for further information. If you would like more information on how something listed in any of my posts specifically affects you, please feel free to comment below, email me, or call me anytime.
Pushy 403(b)/TSA Salespeople: A True Story
Does this story sound familiar to any of you teachers out there?
Here is an excerpt from an email I recently received from one of my clients who teaches in Tustin USD.
Two guys stopped by my classroom yesterday [after-school, uninvited/unannounced] and tried to talk to me about investing… I told them I had it covered. They asked who helped me, and I told them your name and that you were a friend from college. They asked how loyal I was… I told them to get lost. 🙂
Awe… pushy 403(b) salespeople!
I remember them all to well when I was teaching. They treat teachers as “prospects” and the 403(b) as a used-car.
Unfortunately, from my experience teaching, and from what I’ve heard from many other teachers, this story is not an isolated one.
What most 403(b) salespeople fail to realize is that the 403(b) is an investment that teachers are going to rely on when they retire. The 403(b) isn’t some kind of “product” that can just be sold and forgotten about.
We’re talking about people’s retirement here!
Here’s the problem with most 403(b) salespeople:
- They’re salespeople! They work for a specific company, they’re told what “products” to push this month/quarter, and then they are told to sign up as many teachers as possible.
- They don’t stay in contact with their clients. The only time most teachers ever hear back from their 403(b) salesperson (if ever) is when there is a new product for them to push.
- Most 403(b) salespeople aren’t financial advisors. Most 403(b) salespeople can only advise people on their 403(b). They don’t know the first thing about taxes, about life insurance, budgeting, home-ownership, and having a family. The fact of the matter is that all these factors work together – for better, or worse. You need to understand how all these factors play a role in someone’s finances/retirement. Assisting in one area can kill you in another area if you don’t know what you’re doing.
Can you relate to the above story?
Would you like to learn more about your 403(b) and all the options available to you?
If so, please feel free to share your story below, or contact me anytime. We can look over your particular situation and see what option is best for you.
_______________
*Please keep in mind that all the information I post on this site is for general purposes only. I understand that every person’s situation is unique and should be treated as such. If you would like more information about how something listed in any of my posts specifically affects you, please feel free to comment below, email me, or call me anytime.
2010 Recap and Thank You!
I can’t believe it, but it’s been over 6 six years since I left the teaching profession. Although I loved teaching junior high – yes, it’s true, I did love teaching at the junior high level – and although I do miss it from time-to-time, I love what I am doing now, and I am grateful for the many wonderful clients who trust me with their finances. English teachers – that wasn’t a run-on sentence was it?
Many of you know that in my first year of teaching back in 1999 Brandy and I got engaged and we were married the following year in 2000.
Many of you also know that I was frustrated in those first couple of years trying to plan our retirement and trying to make the right financial decisions for our future. I was frustrated with the lack of advice that teachers had available to them. I was frustrated that I couldn’t find anyone that I trusted to help us.
I remember asking several teachers about who they used for 403(b) advice. Every single teacher I asked mentioned a different name, and said something like, “but, I haven’t seen them since I signed up with them for my 403(b).” I thought are you kidding me?
To add to my frustrations, I had a very bad personal experience with a tax preparer back in 2002.
It was about this time that I realized teachers deserve better. Teachers deserve to have someone who focuses on their needs and their unique qualities and financial circumstances.
Teachers need someone who they can trust assisting them with their taxes, 403(b), finances, and life insurance needs.
It is now my goal to be the tax and financial advisor that I was looking for when I started teaching!
My goal is to educate everyone on how to make safe, smart, money decisions.
Can I help people who aren’t teachers? Absolutely! And I am lucky to have such great clients who refer their family and friends to me each year. I know they understand that although most of my literature has the word teachers in it, that I work hard to understand everyone’s unique financial needs.
So, to sum it all up, thank you! Thank you to all my clients who trust me with their tax and financial needs. Thank you to all my clients who refer their fellow teachers, and their family and friends to me each year.
My goal in 2011 is to serve all of you better. If you have any suggestions or thoughts on how I can better assist you, please feel free to comment below or email me anytime.
May 2011 Be Your Best Year Yet!
____________________
PS. Two of my clients have done some pretty cool things. Mr. Keuilian who I used to teach with wrote a book titled I Love You Mr. K. I encourage you to check it out. His book does a great job of diving into the heart of how many teachers feel.
Also, Jeff Ricupito over at Orange High in OUSD has created Edu-Kits. Edu-kits are designed to provide all of the necessary tools and resources to help all students achieve academic success. Check it out!
403(b) vs. Roth 403(b)
Although many teachers have heard of the 403(b), it has been my experience that most teachers have not yet heard about the Roth 403(b).
So, what are the differences?
The short answer: for the most part, the main difference is how and when you’re taxed on your money. For a little more information, keep reading.
If after reading the information below you would like to learn more, feel free to contact me. We can discuss which option is best for you and your specific situation, and how to maximize your savings and minimize your taxes.
Traditional 403(b)
Contributions – Generally, the maximum contribution limit for 2014 is $17,500. If you are age 50 and older you may contribute an additional $5,500/yr. Further, if you have completed 15 or more years of service with your current school district/employer, you may be able to contribute up to $3,000 more per year.
Pre-Tax – The money you contribute comes directly out of your paycheck and is a tax deduction in the year you make your contributions.
Tax Deferral – Your money will grow tax-free until you withdrawal from your account.
Taxes – As long as you follow IRS regulations, you will only be taxed on the money when you withdraw. Currently, withdrawals are treated as ordinary income.
Early Withdrawal Penalties – Except under certain conditions, you will be penalized by the IRS and by your state if you take any money out of your account before the age of 59 ½. You will also be taxed on all the money you withdraw.
Loans – Most companies allow loans from within the 403(b). Each company is different in how they handle loans. You should check with your company/advisor before taking out a loan.
Roth 403(b)
Contributions – Similar to a Traditional 403(b). Generally, the maximum contribution limit for 2014 is $17,500. If you are age 50 and older you may contribute an additional $5,500/yr. In addition, if you have completed 15 or more years of service with your current school district/employer, you may be able to contribute up to $3,000 more per year.
Post-Tax – The money you contribute comes directly out of your paycheck after taxes have been assessed.
Tax Free – As long as you follow IRS regulations, all your money could be tax–free to you and your heirs after age 59 ½.
Early Withdrawal Penalties – Except under certain conditions, you will be penalized by the IRS and by your state if you take any money out of your account before the age of 59 ½. In most cases, you will only be taxed on the gain earned from the money you withdraw.
Loans – Currently the law is not specific when it comes to loans with the Roth 403(b). Therefore, most companies do not yet allow loans to be taken.
For more information on 403(b)’s, I encourage you to either give me a call, or visit the IRS website below.
http://www.irs.gov/pub/irs-pdf/p571.pdf
–Updated July 3, 2014.
“It’s Like Taking the Gambling Out of the Stock Market”
The other day I was talking to an acquaintance about what I do, and about the type of investments most of my clients prefer, and after I was done explaining he asked, “So, it’s like taking the gambling out of the stock market?” I said,…“exactly.”
______________
Usually after explaining to new clients about the type of investments most of my clients prefer, they will say, “so, it’s a conservative investment.” And although it is conservative, I think when most people ask this question, what they are really thinking is that their money doesn’t have the potential to earn what it could somewhere else – which of course, is not necessarily true.
______________
The investments most of my clients prefer will receive a positive return when the stock market is up over a given year, but the investments won’t lose money when the stock market is down over a given year. Will they receive the exact gain that the Dow Jones or S&P 500 does when those markets are up? Of course not, but the truth is NO investment can promise that. Some will do better, and most, according to many studies, will do worse.
_______________
The best thing about the investments most of my clients prefer is that in the years the market does go down – and we know that will happen from time to time – they won’t lose any money in their account. This is something that investing in stocks and mutual funds cannot guarantee.
The best part for teachers is that you can contribute into these investments directly from your paycheck into a 403(b) or Roth 403(b). It’s easy to set up, and easy to make changes.
_______________
So, if you are a current client, and you feel the need to learn more about the investments you’re in, please contact me. I’d be happy to go over your specific investments.
If you are not a current client, and you would like to see if this type of investing makes sense to you, contact me and discover for yourself if it makes sense.
—Updated July 3, 2014
__________
*The articles on this blog are for education and entertainment purposes only and should not be taken as financial or legal advice. See legal disclaimer for further information. If you would like more information on how something listed in any of my posts specifically affects you, please feel free to comment below, email me, or call me anytime.
