Employee contribution limits will remain unchanged next year. The IRS isn’t increasing employee contribution limits for 401(k)s or flexible spending accounts for 2021.
Limits will remain the same with employees being able to defer up to $19,500 into a 401(k), 403(b) and most 457 plans at work. The limits also remain the same for employee catch-up contributions for those 50 and older, at $6,500. Last year saw a $500 jump in the overall employee contribution limit for 2020 plus a $500 rise in the catch-up limit.
For 2021, the dollar limit for employee contributions to flexible spending accounts, made pretax through salary reductions, remains unchanged at $2,750. However, for health FSA plans that permit the carryover of unused amounts, the maximum carryover amount for 2021 is $550, an increase of $50 from the original 2020 carryover limit.
Making smart decisions in times of panic may not be easy, but for those who can keep a cool head and follow a plan, there are some calculated steps you can take towards growing your wealth despite the situation. Now, and for generations to come.
The headlines over the past months have been riddled with two serious threats to the health and well-being of people across the U.S. The first and obvious threat is the novel coronavirus (COVID-19) outbreak. The other obvious danger is the stock market, which entered bear market territory for the first time in 11 years.
If your financial situation has hit a rough spot, there are several things you can do to get your retirement plan moving in the right direction again.
Does it feel like the coronavirus pandemic has pushed all your retirement plans by the wayside? If you recently lost your job or had a reduction in income, you may not be thinking about your long-term future and retirement plans. You may only be focused on surviving from one day to the next.
Regardless of your current situation, all is lost when it comes to retirement planning.
You can get things moving in the right direction again. While there are no easy answers or quick fixes in these uncertain times, there are a few ways you can shore up your retirement plan and get it back on track. Here are some things to consider.
What is a Qualified Opportunity Fund and How Does It Work?
To defer a capital gain, a taxpayer has 180 days from the date of the sale or exchange of appreciated property to invest the realized capital gain dollars into a Qualified Opportunity Zone (QOZ) Fund. The fund then invests in QOZ Property.
QOZs are designed to spur economic development by providing tax incentives for investors who invest new capital in businesses operating in one or more QOZs.
The IRS recently issued Notice 2020-39, which offers relief to both qualified opportunity zone funds (“QOFs”) and persons seeking to invest in QOFs who are affected by the global COVID-19 pandemic.
The current pandemic is causing many Americans to seriously contemplate their finances and retirement plans more closely. Those approaching retirement are wondering if this is still a good time to retire, what this will mean for their future, and if it will greatly impact their retirement investments.
They are also worried about their estate plan, and if the retirement savings they have in place will still be enough.
It’s not a bad idea to take this time to contemplate all of these things, and Bob Michaels is here to help. Bob is working with clients every day as they navigate these challenging times, and we highly recommend you reach out. Having a strong estate plan in place will help you know that your retirement will be protected, regardless of what life brings. Bob is available for free consultations by phone, virtually, or in person.
Securing Your Investments
While most of the country is focusing on staying healthy and safe during the current pandemic, it’s hard to escape the real economic impact all of this has taken. The general age group most susceptible to the health dangers of COVID-19, people 60 years old and older, includes many Americans who are nearing retirement. The recent stock market volatility has, in many cases, significantly impacted their portfolios. Many are concerned that their retirement savings will no longer be enough and what that might mean.
Do you need a Trust?
This is the primary question asked by many of our estate planning clients. Which is why we’re offering our top 10 reasons to consider a Trust.
Keep in mind there are many different types of Trusts, one size does not fit all, and if this is something you’re considering, it’s best to schedule a consultation to find out what is best for you and your situation.