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Good News! The IRS Has Increased Retirement Contribution Limits for 2020

November 12, 2019 | Leave a Comment

retirement contribution limits

Most people on debt-free journeys aren’t thinking about retirement very often. If you follow the Dave Ramsey mindset, you don’t even begin really contributing to your retirement accounts until you’ve paid everything off. However, this week, the IRS announced some good news. The agency is increasing retirement contribution limits in 2020.

What This Means

If you are currently contributing any money to a 401(k), 403(b), or 457 plan, the amount you can contribute will increase starting January 1, 2020. It has increased from $19,000 to $19,500. Additionally, catch-up contributions will also increase from $6,000 to $6,500.

You can read a full summary of the changes being made next year here. If you’d like to take a closer look at all of the changes being made in 2020, you can read the officials changes on the IRS websites.

How This Can Help You

Retirement accounts are typically not taxed. By contributing the most you possibly can, it decreases the amount of your taxable income, which can help you save money as well as better prepare for your financial future. All in all, it is a great way to begin building your wealth.

It is important to keep in mind, however, that if you are currently still struggling paying off debts, it may be a good idea to hold off on retirement contributions. Instead, use the extra money to snowball your debt. After all, once you are debt-free, you will be able to throw as much money as you want towards your retirement goals.

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Amanda Blankenship
Amanda Blankenship

Amanda is an editor and writer. She has a passion for sharing information that helps people and communities to better themselves in some way. In addition to writing online, she also freelances for local newspapers in her hometown of Charlotte, NC.

www.savingadvice.com

Filed Under: Debt Freedom Progress, Goal Setting Tagged With: 401k, financial planning, IRA, IRS, retirement, retirement contribution limits, retirement planning

1 In 5 Americans with Matching 401(k) Plans Are Leaving Money on the Table

May 9, 2018 | 1 Comment

Matching 401(k) plans are one of the coolest types of employee benefits out there.
Who would turn down free money? Apparently, plenty of Americans are doing exactly that: 20 percent of them underfund matching 401(k) plans, according to the Motley Fool. This significant mistake effectively dismisses free money.

Approximately three-quarters of companies with 401(k) plans offer a matching program where the employer contributes an equal amount to the employee’s contribution up to a certain limit.

The employer’s matching contribution is extra money that you receive simply by contributing to your retirement account – in essence, free money.

Bypassing Free Money

If you don’t contribute to the matching limit, you are bypassing the opportunity to add this free money to your tax-deferred retirement funds.
[Read more…]

Our Debt Free Family
Our Debt Free Family

Team Our Debt Free Family is the administrative WordPress user account for Ourdebtfreefamily.com. Our Debt Free Family is a premium classic personal finance blog. Our mission is to inform, educate and help you get out of debt.

www.ourdebtfreefamily.com

Filed Under: Uncategorized Tagged With: 401k, retirement planning

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About The Author

Amanda Blankenship is a 24-year-old full-time website manager and blogger. She is currently hacking her debt by saving money and investing, all while managing her family and enjoying her adult life.

 


Five Steps To Debt Freedom

Here are five simple guidlines that will help you pay off debt.  

1) Get an emergency fund so you don’t take on debt when something comes up.

2) List your debts. This way you know where you stand.

3) Use the debt snowball. Pay your debts from smallest to largest, or most expensive to least expensive.

4) Avoid new debt. No new credit cards or loans. Period.

5) Go all cash. After everything is paid off, switch to all cash.

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