This version’s edition of Industry Insights centers around how spouses can work together to get the full benefit from a variety of retirement accounts available to them, such as Roth IRA and 401k accounts. This a very easy-reading, straight-forward article from US News and World Report writer Emily Brandon. The article entitled is entitled “How Married Couples Can Max Out Their Retirement Accounts”.
With 401k plans, individuals are able to defer up to $18,000 per year ($36,000 per couple) in 2016. If you are 50 or older, you are able to contribute another $6,000 per year ($12,000 per couple). It’s always a great idea to make deposits to maximize both company matches for optimal benefit and look closely at fund fees to keep plan charges low.
As far as individual retirement accounts are concerned (IRA’s), 2016 allows individuals to save $5,500 per year and an additional $1,000 if you are 50 years of age or older. Even if one spouse does not work, the working spouse (providing their income is high enough) is able to contribute on behalf of their spouse into a Spousal IRA. One important note: be careful if you are covered by an employer sponsored plan when considering making IRA contributions, as income threshold levels come into play that can potentially remove any tax-saving benefits and make any contributions non-tax deductible.
A Roth IRA is another option. A Roth IRA differs from a traditional IRA in that contributions are made after-tax, grow tax-free and are completely untaxable upon retirement. Furthermore, a Roth IRA also has the advantages of much higher income thresholds before contribution limits are phased-out and also do not have minimum distribution dates. Contribution amounts to a Roth IRA are the same as to a traditional IRA.
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