Double Your Savings:
Save on Taxes When You Save for Retirement
© by Lita Epstein
Taxpayers got some nice bonuses if they save for retirement as part of the tax cut packages in 2001 and 2002. Not only did taxpayers get a boost in the amount they can save tax free or tax-deferred, they also have more options for how they can handle retirement plan distributions without being immediately taxed on the withdrawal of the money.
Tax-deferred contribution limits were raised for most types of retirement plans, including IRAs, 401(k)s, 403(b)s, 457 plans, Simplified Employee Pensions (SEPs), SIMPLE plans, and a new type of individual plan - the Individual 401(k). People 50 and over can save even more with catch-up provisions.
Low income earners whose adjusted gross incomes (AGI) are under $50,000 (married filing jointly), 37,500 (head of household filers), or $25,000 (single filers) can see even greater benefits for their contributions to any of these types of retirement plans. While higher earners get to deduct the contribution from their adjusted gross incomes, those earning under these caps get a tax credit - which means they can subtract a portion of what they contribute to retirement plans directly from their tax bill.
For more detail on all these retirement tax avoidance options, click on the link that interests you:
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Copyright 2003, by Lita Epstein.
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- Teach Yourself Retirement Planning in 24 Hours
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