GOOD READS

Modest 401(k) and IRA Changes Coming in 2014

The amount workers can contribute to 401(k)s and individual retirement accounts will stay the same in 2014. Inflation, as measured by the Consumer Price Index, did not increase enough to justify raising the contribution caps. "Some pension limitations such as those governing 401(k) plans and IRAs will remain unchanged because the increase in the Consumer Price Index did not meet the statutory thresholds for their adjustment," according to a statement from the Internal Revenue Service. But some of the income thresholds that allow savers to qualify for tax deductions and credits will increase next year. Here's a look at how 401(k) and IRA rules will change in 2014:

[See: 6 Ways Retiring Can Be More Affordable.]

Limits for 401(k) contributions unchanged. Taxpayers may contribute up to $17,500 to their 401(k), 403(b), most 457 plans and the federal government's Thrift Savings Plan in 2014, which is the same amount as in 2013. The catch-up contribution limit for employees age 50 and older is also unchanged at $5,500. In 2012, 11 percent of 401(k) participants contributed the maximum possible amount, according to a Vanguard study of 2,000 401(k) plans with 3 million participants. Some 401(k) plans also have lower plan-specific caps on contributions.

IRA contribution limits unaffected. The limit on IRA contributions will continue to be $5,500 in 2014. Individuals age 50 and older can contribute an additional $1,000, the same catch-up contribution as in 2013. Just under half (47 percent) of IRA savers contributed the maximum amount in 2011, according to an Employee Benefit Research Institute analysis of 20.5 million accounts.

[Read: The Best Tax Breaks for Retirement Savers.]

Larger IRA income limits. The tax deduction for traditional IRA contributions is phased out for savers with a workplace retirement plan who have modified adjusted gross incomes between $60,000 and $70,000, up from $59,000 and $69,000 in 2013. The income phase-out range for married couples with retirement accounts at work will also climb by $1,000 to between $96,000 and $116,000. For investors who don't have a workplace retirement plan but are married to someone who does, the tax deduction is phased out if the couple's income is between $181,000 and $191,000, which is $3,000 more than in 2013.

Higher Roth IRA income cutoffs. Workers can earn $2,000 more ($3,000 for couples) in 2014 and still be eligible to contribute to a Roth IRA. The AGI phase-out range for Roth IRAs is $114,000 to $129,000 for singles and heads of household and $181,000 to $191,000 for married couples. However, investors who earn more than these income limits may still be able to convert traditional IRA assets to a Roth. "Even if you are phased out by income from making a Roth contribution, you can contribute to a traditional IRA that is nondeductible and then convert that to a Roth," says Lara Lamb, a certified financial planner and founder of Lamb Financial Planning in Encino, Calif. "However, you need to be aware that the conversion might be taxed."

[Read: How Social Security Will Change in 2014.]

Bigger saver's credit threshold. Low- and moderate-income workers who save for retirement in 401(k)s and IRAs are eligible to claim a tax credit that can be worth as much as $1,000 for individuals and $2,000 for married couples. Couples can claim the saver's credit until their AGI exceeds $60,000, which is $1,000 more than in 2013. The income limits are $45,000 for heads of household and $30,000 for individuals, up from $44,250 and $29,500, respectively, last year. Saver's credits were claimed on 6.1 million tax returns in 2010, but most people received small benefits. The average saver's credits were $122 for individuals, $165 for heads of household and $204 for couples.



More From US News & World Report

Quiz: How well do you know India's economy?

Question 1

Which of these products is India the world's largest producer of?

Poll Choice Options
  • Wheat
  • Rice
  • Milk
1
2
3
4
5
6
7
8
9
10

Latest News

  • India's GDP quadrupled in 10 years under UPA: Anand Sharma

    Mumbai, April 19 (IANS) India created a world record of quadrupling its GDP in the past 10 years under the two UPA governments, Union Commerce Minister Anand Sharma said here Saturday. In contrast, even during the industrial revolution, countries like the US, Britain or Germany could not double their GDP in 10 years. Japan was the first country which doubled its GDP in a decade while China broke it by tripling its GDP in a decade, Sharma said, citing various reports, including the Reserve …

  • Laundry Project India to expand operations

    Chennai, April 19 (IANS) Corporate clothes launderer Laundry Project India plans to expand its business operations by setting up operations in Pune and National Capital Region (NCR) this year and also venture into leasing of linen and corporate uniforms, said a top company official. The organised laundry market size in India is around Rs.5,200 crore as per KPMG study," R.Balachandar, founder and CEO, told reporters here Saturday. He said while most of the corporates in this segment are …

  • Goa Congress unhappy with Karnataka unit over water dispute

    Panaji, April 19 (IANS) The Congress in Goa Saturday said it will ask its party's government in neighbouring Karnataka to fall in line over a water dispute being heard by a central tribunal. Congress spokesperson Durgadas Kamat told a press conference that the Karnataka government was defying a recent Mhadei Water Disputes Tribunal (MWDT) decision to erect a wall across a canal, built to divert water from the Mhadei river to the Malaprabha basin in the state. We will speak to the Congress …

  • CBI probe sought into Vadra's land deal

    New Delhi, April 19 (IANS) A plea has been filed in the Delhi High Court seeking a CBI probe into licences granted to several real estate developers, including the one with which Congress chief Sonia Gandhi's son-in-law Robert Vadra's Skylight Hospitality Pvt. In the plea, he contended that allocation of licences for developing colonies was contrary to provisions of the Haryana Development and Regulation of Urban Areas Act, 1975. The plea also sought quashing of the June 3, 2013 letter by …

  • Will Nehru-Gandhi dynasty reboot or fade out?

    Narendra Modi is not far off the mark when he says that the May 16 results will be the Congress's worst. It must be mortifying for the Congress that this figure has become something of a psychological marker. The only consolation for the Congress will be that such wild swings of fortune are not unknown in Indian politics. For the Congress, however, the focus has to be on the post-poll scenario since a defeat is staring it in the face. …

IN-DEPTH ANALYSIS & INTERVIEWS

  • This might well be India’s biggest Ponzi scam

    It was just too good to be true. Ashok Khital, 45, displays every symptom of a man who knows he's been conned. …

  • India's star studded football league

    High and mighty including Sachin, Salman & Sun Group buy ISL teams …

  • Leaderspeak with Rajesh Janey

    Rajesh Janey, President - India & SAARC, EMC shares many firsts in his life. …

  • Seed of Doubt

    Field trials have been allowed again in India. But two decades after their global launch, genetically modified (GM) crops remain controversial. …

  • Power Hungry

    Gujarat has power round-the-clock. Most other states do not. Why this will matter in the general elections. …

  • Etcetera

    The most keenly watched contest of the current general election will be the one for the Varanasi parliamentary seat, where the Bharatiya Janata Party's prime ministerial hopeful Narendra Modi squares off ... …

  • Economy vs Democracy

    As the country gets election fever, cash comes out of mattresses and turns into liquor, gifts, and food. But it is not bad for the health of the economy, reports Sarika Malhotra from the trenches. …

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    16.52+0.88+5.63%
    UNITECH.BO
    73.85+3.05+4.31%
    HDIL.BO
    13.36+0.25+1.91%
    SUZLON.BO
    718.55-6.70-0.92%
    HDFCBANKSL.BO
    57.40+2.75+5.03%
    JAIPRA.BO
  • Price % Gainers
    Price % Gainers
    NamePriceChange% Chg
    12.60+2.10+20.00%
    AGRIMONY.BO
    242.50+40.40+19.99%
    ACRYSIL.BO
    83.50+13.90+19.97%
    SICAL.BO
    46.00+7.65+19.95%
    SHRGLTR.BO
    65.25+10.85+19.94%
    AHLUCONT.BO
  • Price % Losers
    Price % Losers
    NamePriceChange% Chg
    11.60-2.70-18.88%
    ANISHAIMPEX.BO
    51.10-8.85-14.76%
    WINSOMTX.BO
    11.70-1.30-10.00%
    BLCISER.BO
    425.00-40.00-8.60%
    GCMSECU.BO
    59.40-5.55-8.55%
    JBML.BO
  •  
    Recent Quotes
    Symbol Price Change % ChgChart 
    Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
    You need to enable your browser cookies to view your most recent quotes.
  • Recent Quotes News

    •  
      Sign-in to view quotes in your portfolios.