2013 IRA Contribution Limits

Those who have IRA investments must be aware that there is an increase for the 2013 IRA contribution limits. This is definitely a good news for every IRA owner because this means that they are allowed to set aside a bigger amount of money for their retirement. This also means that they have bigger chances of achieving their financial goals upon reaching retirement age, and so they can enjoy more.

Those who do not have an IRA yet are advised to open an account as soon as possible. Account opening eligibility is based on the set of IRA rules and regulations. If you have an existing 401k account, you may opt to withdraw and transfer your funds to IRA. Make you that you are familiar with 401k withdrawal rules before you do a transfer.

The New IRA Contribution Limits for 2013

For the year 2012, the regular maximum contribution limits for IRA is $5,000. For 2013, however, the limit increases from $5,000 to $5,500. Catch-up contribution, which is applicable for those investors 50 years or older, still remain the same at $1,000. This means that IRA holders who belong to this age bracket can contribute up to the maximum of $6,500.

Catch-Up Contributions

The benefit of catch-up contribution is to allow the IRA owners of age 50 years or older to save more funds as they near retirement age in the hope to increase the tax-deferred income. Investors of this age bracket must take advantage of catch-up contributions so they will enjoy bigger returns and better retirement in the near future.

Roth IRAs

The maximum contribution limit for Roth IRA is the same as with the traditional IRA. Many investors believe that Roth IRA is the better type of IRA as they can enjoy tax-free distributions in the future. Also, if you are able to open an IRA with the best Roth IRA providers, then you can enjoy bigger profits which are totally free of tax.

If you currently have a traditional IRA and want to enjoy tax-free distributions later, you can still rollover your account to Roth, in accordance with the IRA rollover rules.

Self-Employed IRAs

The contribution limits have changed for Self-Employed IRAs as well. For SIMPLE IRA, the contribution limit increases to $12,000 in 2013. Catch-up contribution for SIMPLE IRA is $2,500.

For SEP IRAs, the account holders can contribute a maximum of 25% of the gross income or $51,000, whichever is lower.

Take Advantage of Maximum Contributions

There are plenty of benefits that investors can enjoy if they choose to maximize their contributions for 2013. First of all, you can enjoy bigger tax-deferred earnings if you have a traditional IRA. If you have a Roth IRA, then you can you can set aside more funds for the future, all of which have the chance to grow into bigger and tax-free profits.

Generally, if you save more, you will most likely be able to reap more.

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The information provided on this website does not constitute professional financial advice. We do our best to maintain current & accurate information, but some information may have changed since it was published. Please consult your tax or legal advisor(s) for questions & advice concerning your personal financial situation.
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