{"id":18871,"date":"2017-05-31T10:30:13","date_gmt":"2017-05-31T10:30:13","guid":{"rendered":"https:\/\/smallbiztrends.com\/?p=447715"},"modified":"2017-05-31T10:30:13","modified_gmt":"2017-05-31T10:30:13","slug":"apply-these-5-secret-techniques-to-catch-up-on-retirement-savings","status":"publish","type":"post","link":"https:\/\/businessnewsbox.com\/?p=18871","title":{"rendered":"Apply These 5 Secret Techniques to Catch Up on Retirement Savings"},"content":{"rendered":"

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Small business owners bear the burden of saving for their retirement<\/a> and shouldn\u2019t count on the sale of their companies to provide the financial security they seek. Many owners often plow extra cash back in the business rather than socking it away in a tax-advantaged plan. The good news: growing older entitles you to make \u201ccatch-up contributions\u201d designed to increase savings as retirement approaches.<\/p>\n

How to Catch Up on Retirement Savings<\/h2>\n

1. Catch-up Contributions to 401(k) Plans<\/h3>\n

The maximum salary reduction contribution to a 401(k) plan in 2017 is $18,000. However, starting in the year in which you attain age 50, you can increase the contribution by $6,000, for a total contribution of $24,000. The $6,000 catch up contribution is intended to boost retirement savings for those nearing retirement. However, the additional contributions can be made without regard to prior contributions, so the term is really a misnomer. Both the basic and catch-up contribution amounts may be adjusted annually for inflation. Find more information in IRS Publication 560<\/u>.<\/a><\/p>\n

\u00a02.\u00a0Catch-up Contributions to SIMPLE IRAs<\/h3>\n

If your company has a SIMPLE IRA, the basic contribution amount for 2017 is $12,500. However, starting in the year in which you attain age 50, you can increase the contribution by $3,000, for a total contribution of $15,500. As in the case of 401(k) plans, both the basic and catch-up contribution amounts for SIMPLE IRAs may be adjusted annually for inflation. Find more information in IRS Publication 560<\/u><\/a>.<\/p>\n

3. Catch-up Contributions to IRAs<\/h3>\n

Whether or not you have a qualified retirement plan, you can increase retirement savings through IRAs and Roth IRAs. If you are eligible to make contributions — there are income limits for Roth IRAs and income limits for traditional IRAs for those who are participants in qualified retirement plans — you can increase your annual contributions. The basic contribution to a traditional or Roth IRA for 2017 is $5,500. However, starting in the year in which you attain age 50, you can increase the contribution by $1,000, for a total contribution of $6,500. The basic contribution limit may be increased annually; the catch-up contribution amount is fixed by law. Find more in IRS Publication 590-A<\/u><\/a>.<\/p>\n

4.\u00a0Catch-up Contributions to HSAs<\/h3>\n

If you have a high deductible health plan (HDHP), you can contribute to a health savings account (HSA) on a tax-deductible basis. The annual contribution limit depends on whether you have self-only coverage or family coverage. For 2017, the contribution limit is $3,400 for self-only coverage and $6,750 for family coverage. However, starting in the year in which you attain age 55, you can increase your contribution by $1,000 (each spouse must have his\/her own HSA to make a catch up contribution).<\/p>\n

Why is this healthcare-related savings program included in a retirement savings blog? The reason: Funds in HSAs are not subject to any required withdrawals and aren\u2019t forfeited if not used for medical care (there\u2019s no use-it-or-lose-it feature for HSAs). And, in fact, there\u2019s an important retirement savings aspect. Funds withdrawn to pay for qualified medical expenses are tax free but funds can be withdrawn for other purposes. When funds are used for other purposes, they\u2019re taxable and subject to a 20 percent penalty. The penalty, however, does not apply for distributions after age 65. In other words, if you contribute to an HSA and don\u2019t use the money for healthcare, you can use it penalty free to supplement retirement income. Find more information in IRS Publication 969<\/u><\/a>.<\/p>\n

Note:<\/em><\/strong> The American Health Care Act that is currently under consideration in Congress would:<\/p>\n