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contribution limits Archives -

You Can Contribute More to Your Retirement in 2019

By | 2018, Money Moxie, Newsletter | No Comments

Good news is coming for those looking to max out their retirement plans. In 2019, the contribution limits will be raised on most retirement accounts. This opens the door to higher tax deductions, more tax-deferred growth, and better savings ratios.

Employee contribution limits for the 401(k), 403(b), and 457 plans will be raised to $19,000 annually. For those individuals age 50 and older, an extra $6,000 contribution is allowed. The ceiling on SIMPLEs climbs to $13,000 with an additional $3,000 for those 50 and older. Both traditional IRAs and Roth IRAs will jump to a $6,000 annual limit with a $1,000 extra contribution for those born before 1970.

Deduction phaseouts for traditional IRAs of active plan participants will also start at higher levels in 2019, from adjusted gross incomes of $103,000 – $123,000 for married couples filing jointly and $64,000 – $74,000 for single filers. Roth IRA AGI phaseouts will increase to $193,000 – $203,000 for couples and $122,000 – $137,000 for individuals.

If you have questions about how these changes can impact your financial plan, please call us to schedule a review with one of our Wealth Managers.

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Will You Benefit From the Recent Tax Cut?

By | 2018, Money Moxie, Newsletter | No Comments

Changes to the marginal tax-brackets will benefit those who are close to the threshold for the 10 percent thru 32 percent brackets. If your income is $400,000, you will hit the 35 percent marginal bracket with less income than in 2017. One notable change is the top bracket–now 37 percent–affecting those with income of $600,000 or more.

2018 Marginal Tax Rates

Contribution Limits

Retirement contribution limits for some plans have been increased while others remain the same.

Standard Deductions

By increasing the standard deduction, the government will effectively reduce the number of filers who itemize. The new married limit is $24,000 and the single limit is $12,000. Both are double last year’s limits.

Itemized Deductions

The new law contains limitations that change the value of itemizing deductions for many filers.

Alternative Minimum Tax

The number of filers affected by the Alternative Minimum Tax is expected to drop by 96%. And many filers may not have to pay AMT again. This is due to two big changes (below).

Higher exemption levels–the amount of income automatically exempt from AMT calculation has increased to $109,400 for married and $84,500 for single.

Higher exemption phase-out levels–the income level above which you gradually lose your income exemption. The phase-out levels increased to $1,000,000 for married and $500,000 for single.

*Smedley Financial and its employees do not provide tax advice; therefore it is important to coordinate with your tax advisor regarding your specific situation.

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