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Traditional & Roth IRA Rules to Decrease Other Retirement Contributions
Traditional and Roth IRA Rule Changes May Cut You Off From Saving
Traditional and Roth IRA rules are likely changing. There is a great possibility that the Traditional and Roth IRA contribution limits that are now in place for your other retirement plans to decrease within the next year. It seems like no matter what road people choose, those trying to save for retirement cannot catch a break. The news of the contribution limit changes comes after it was announced that there would be no increase for cost-of-living for those receiving Social Security benefits. These changes will have a severe impact on anyone who is trying to put money away for retirement.
In a report released by the consulting firm Mercer, officials stated, "If recent inflation patterns continue into September, it is possible there will be a decrease in the statutory limits on qualified retirement-plan contributions and benefits for 2010." The limits on how much money you can put away in a retirement plan are adjusted annually and are done so according to a statutory formula that is based on the rate of inflation. This means that depending on the inflation for the later part of this year, the formula could very well produce limits for next year that are much lower than the limits that are currently in effect.
With the current Traditional and Roth IRA rule limits, it is possible to place up to $16,500 per year into your 401(k). These limits are based on a pre-tax basis. If you are over the age of 50, your current limit is $22,000 per year. With the changes in inflation, that amount could be reduced by $500. Your IRA contribution limits are different. The limit for an IRA is $5,000 per year, or $6,000 if you are over 50. There are a few things to take note of when discussing this possible reduction.
First of all, if the government reduces the Traditional and Roth IRA rule limits, it would send the wrong message to all of those who have been contributing to an IRA retirement plan, or any other type of plan. Richard Krasnay, of RJK Wealth Management, states, "I'm not sure that a decrease in the statutory limits is a good idea in this economic environment. The government should be providing more incentives for people to contribute to a retirement plan, not reducing incentives." Many people agree. Mercer states, "A reduction in the limits would be another setback for workers who are struggling to rebuild their retirement savings in the wake of the financial crisis."
The decrease would not be very significant to most workers because very few people actually save the maximum amount annually. On average, workers only defer 7% of their annual pay or around $4,000 to $5,000.
Backstop Roth IRA and Other Alternative Retirement Savings Options
However, what happens if you are among those people who would be affected by the decrease? Many people have already started panicking about the decrease. There is no need to send yourself into a tailspin. There are even better ways to save your money for retirement. One option is to check if your 401(k) will allow any after-tax contributions. Many people have asked if they can have a 401(k) and an IRA at the same time. The answer is yes. In addition to your 401(k), you could open an IRA to increase your savings. Even though the decrease in limits could happen, advisors suggest that all workers continue to contribute as much as possible. This will help save for retirement as well as avoid taxes on earned income.
While the final decision has not yet been announced, the IRS plans to make that Traditional and Roth IRA rules announcement on October 15, 2009. This is the same date that the Bureau of Labor Statistics releases the September CPI-U. Workers are hoping that the government will not reduce the limits and hinder any retirement savings.
Unfortunately, there is a very good chance this decrease could become a reality. We have mentioned a few other options, such as after-tax contributions and an IRA, though some people may be unaware of this, there is one more option. It is called a Roth on Roids. This is a specially designed program developed by Rocco Beatrice and Estate Street Planners, LLC. This unique program involves opening a savings account with an insurance company. This form of retirement plan investing has many benefits. It allows your earnings to grow tax-free and there are no contribution limits whatsoever! This means that the proposed decrease in the contribution limit would not have any effect on you if you have a Roth on Roids. This wealth-building tool is a guaranteed way to never lose money in the market again and will be correlated to the S&P500 in up years only. This program is one of the best ways to build your retirement savings while paving the road to tax-free income after retirement. So, even if the government changes the annual contribution limits, you still have ways to save for retirement.
About the Author
Best IRA Rescue provides services on your IRA investments and traditional IRA and will help you reduce your inherited and beneficiary independent retirement account taxes in your estate assets. Roth on ROIDS is your advanced Roth IRA retirement planning strategy and one of the best IRA tax-savings strategies with benefits of a guaranteed death benefit, guaranteed principal, tax-free growth, and tax-free distributions from policy loans.
Contact us if you have any questions on your IRA retirement planning. Best IRA Roth IRA Decreases Retirement Contribution
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What current or recently retired MLB players do you think have taken steroids?
Now with the news of Ortiz and Ramirez taking steroids, who else do you think has taken steroids?
I think:
Carlos Beltran
Carlos Delgado
Mark Teixeira
Mike Lowell
Ivan Rodriquez
Prince Fielder
Possibly Pujols or Thome, but I really hope not.
Pedro Martinez, too
Andruw Jones
Bartolo Colon
Ivan Rodriguez
Rick Ankiel
Magglio Ordonez
Darren Daulton
Carl Pavano
Gary Matthews Jr
Troy Glaus
Jose Guillen
I don't agree with Prince Fielder or Albert Pujols
