It's the question on everyone's mind:
What are the 401(k) and IRA contribution limits for 2014?!
OK, fine, maybe it's not as dramatic as all that, but still, it's something you should know.
On Thursday, the Internal Revenue Service announced that the amount an individual can contribute to an IRA or 401(k) will remain unchanged for 2014. Specifically, the following limits will be in effect:
- For 401(k), 403(b) or 457 plans: $17,500 is the max contribution, though employees who are 50 and over can make catch-up contributions of an additional $5,500.
- For traditional and Roth IRAs: $5,500 is the max, though, again, people who are 50 and over can make catch-up contributions of an additional $1,000.
While those are the same numbers as the limits for 2013, what has changed is the income thresholds for tax deductions and what's known as the "saver's credit," a program that gives tax breaks to low- and middle-income workers. To see the specifics, view the IRS's original announcement.
And a quick reminder, in case you haven't kept up with your reading: Contribution limits regulate how much money you can store in the various types of retirement accounts each year. Depending on your situation—for instance, whether your employer sponsors a savings plan for you or whether you're under the income limit to use a tax-advantaged Roth IRA—you should be utilizing one or more of these accounts to finance your retirement, and it's never too early to start.
For more guidance on these accounts and how to go about saving for retirement, see "Saving for Retirement 101" and "I Want to Save for Retirement." If you've already begun and want to stay on the right track, check out the seven biggest mistakes retirement planners see.