With a new year come changes to many rules and regulations. If you’re still making end of the year plans, you might want to consider switching to a Roth IRA as it’s being touted as a smart end of year move.
If you have an IRA and plan to switch it to a Roth, you’ll have until October 15th, 2013 to reverse the changes should you change your mind. A 3.8 percent tax on new investment income is another reason many are considering switching to a Roth account.
In 2013 how much you may contribute will increase by $500 to $5,000; if you’re over 60 you can contribute up to $6,500.
Income limits are another change to expect. You’ll be able to max out your Roth IRA if you’re filing as “married filing jointly” and make under $178,000. If you’re filing as “single” you can max out your Roth IRA if you make under $112,000.
This year’s changes will continue as you will be able to convert your 401k to a Roth IRA or traditional IRA no matter your income.
As for a 401(k) you can expect to see changes in your contribution limits as well. Investors will be able to bump their savings up by $500; the limit in 2013 will be $17,500. However, those over the age of 50 will not be able to benefit from the increase as the catch-up contribution limit will remain at $5,500.
If you have a 401(k) you might also spot some changes in your statements. Participants will be able to see what fees are being charged on their quarterly or annual statements. The best part of this disclosure is that you will be able to see how your fees add up and make changes if need be.
Eligibility for the saver’s credit, also known as the Retirement Savings Contributions Credit, has also changed. Couples filing jointly may know be able to make up to $59,000 to be eligible for the credit. Single filers cannot make more than $29,500 in 2013 to eligible for the saver’s credit. If you’re the head of a household who is trying to claim the credit, your income cannot exceed $44, 250; a $1,125 jump from the 2012 limit.
Will you be making any changes to your retirement savings next year? For more information about the changes, visit https://www.irs.gov/.