Next year will bring subtle changes to 401(k) and IRA rules, with the changes mostly happening for IRAs. There will be one shared change for both retirement plans that introduces a bigger saver's credit threshold which should please many more people.
The contribution amount workers can put towards their IRAs will stay the same, at $5,500 in 2014, with individuals ages 50 and up being able to contribute the same catch-up contribution range as last year, up to an additional $1,100.
IRA income limits will change in the following ways:
Like the IRA contribution limits, 401(k) contributions will remain the same, with the maximum being $17,500. This extends to taxpayers contributing to their 401(k), 403(b) and most 457 plan, as well as the federal government's Thrift Savings Plan. Employees 50 and older will be able to contribute an additional $5,500, the same as last year.
Great news for low and moderate income workers saving in 401(k)s and IRAs, who can claim a tax credit that could be up to $1,000 for individuals, and $2,000 for married couples. Couples will be eligible to claim the saver's credit up until their adjusted gross income exceeds $60,000 (up $1,000 from 2013), heads of household can claim the credit until theirs AGI exceeds $45,000, and individuals can claim it until they reach $30,000.
Katherine Muniz is a writer for MyBankTracker.com.
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