Guess what everyone? The year 2015 will meet us with a variety of changes, including ones to the IRA and 401k plan. There is much excitement to be seen with the new IRA and 401k in 2015. The changes will be set in place in an effort to make retirement easier and much more enjoyable. Keep reading for more information on the new IRA and 401k in 2015.
The Current IRA and 401k
So, it may be a bit difficult to get excited about the new IRA and 401k in 2015 if you are not aware of what the IRA and 401k is really about. The IRA and 401k are both commonly used ways to save for retirement. When jobs offer retirement plans for individuals, employees usually decide on investing in the 401k or the IRA (individual retirement account). The main difference between the two retirement investments is that the 401k is given by your employer; an IRA is one that you set up through your bank, marketing firm, or another financial company. Below are more brief explanations comparing the two retirement savings options:
- For every amount you put in your 401k, your employer matches it by a set percentage.
- Money is taken from your paycheck, tax-free, and placed in your 401k account.
- Taxes are only taken out when the money is withdrawn.
- Depending on your age, there is a limit of money you can add to your 401k each year.
- You can borrow money from the 401k if necessary.
- You cannot access your full 401k until you are almost 60 years old.
- Any money placed in the IRA has to be done by you. There is no one to match the money invested.
- The IRA gives you more choices for investments, like stocks and bonds.
- The money added to the IRA is not taxed until you make a withdrawal.
- You cannot borrow money from the IRA.
- There is a set limit of fund you can contribute yearly to your IRA.
You can research more information on 401k and IRAs, but with the introduction of the new IRA and 401k in 2015, you will soon find that the two has gotten much better.
Better than Before
With the new IRA and 401k in 2015, earning a hefty retirement savings will become much easier, making retiring more enjoyable for deserving individuals. Here are the changes you can look forward to.
· A New Retirement Account
The myRA is a new account offered by the treasury department. All deposits made to the account will come from payroll. It will only take a minimum of $25 to start the account, and deposit of at least $5 should be made automatically per payday. The best part is that if you were to lose your job, you can transfer the account to your next job. Eligible participants must earn a yearly income of $129,000 or less for singles and $191,000 or less for couples. Like the Roth IRA, the myRA account allows tax-free withdrawals at no specific time. Once the balance of the myRA account hits $15,000, the balance is moved to another account.
· 401k Increased Limits
With the new IRA and 401k in 2015, you will be able to add more money to your 401k. With the New Year will come the ability to contribute $18,000 limit to the account. This is a $500 increase from the previous year.
- Roth IRA Income Cut-off Increase
In 2014, the income cut-off for Roth IRAs was $114,000 for single people and $181,000 for couples. The new IRA and 401k in 2015 has increased the amount by $2,000.
· Increased Saver’s Credit
Any individual in the low or average income bracket who is using the 401k or IRA are eligible for saver’s credit. This credit means that single individuals will get $1,000 and couples will receive $2,000 in tax credits. This is an increase of at least $500.
· One Rollover for IRA
With the new IRA and 401k in 2015, investors will only be allowed to make a single rollover between IRAs throughout each year. If another rollover is done within the same year, the rollover will suffer an income tax charge, a 10% penalty for withdrawing early, and a 6% contribution tax. However, there are no extra fees for a transfer done between trustees more than once a year.
With retirement being a must for most individuals, it is important to start with savings funds early on in your employment. The government has set in place retirement funds to help you save up for retirement. The most popular being 401k and IRAs are taking on a new look for the upcoming year. The new IRA and 401k in 2015 is expecting to be more help for retiring individuals, making retirement easier and more settling financially.