Discover how to double your savings with the right strategies
- Maximize your 401(k) contributions by adding catch-up contributions if you’re 50 or older
- Consider switching from traditional pretax contributions to Roth 401(k) contributions
- Take advantage of in-plan Roth conversions to increase the value of your contributions
- Self-employed individuals have even more options for saving, including solo 401(k)s and cash-balance defined-benefit plans
When it comes to saving for retirement, many people focus on the maximum contribution limit for their 401(k) plans. However, there are several strategies you can use to save even more and take advantage of preferential tax treatment. One way to increase your savings is by adding catch-up contributions if you’re 50 or older. By maxing out your $23,000 contribution and adding a catch-up contribution of $7,500, you can save a total of $30,500. Another strategy is to switch from traditional pretax contributions to Roth 401(k) contributions. While you’ll pay taxes upfront on your contributions, you won’t have to pay taxes on the growth when you withdraw the money in retirement. In-plan Roth conversions are also an option to consider. By making extra posttax contributions and converting them to Roth contributions, you can increase the value of your 401(k) contributions. Self-employed individuals have even more options for saving. They can take advantage of solo 401(k)s, which allow them to contribute both as an employee and an employer, up to the maximum limit of $69,000. Additionally, they can set up self-employed cash-balance defined-benefit plans, which have higher contribution limits. By utilizing these strategies, you can maximize your 401(k) contributions and save more for retirement.
Factuality Level: 8
Factuality Justification: The article provides information about the maximum contribution limits for retirement plans and various strategies to save more for retirement. The information is based on IRS announcements and reports from Vanguard. The article does not contain any misleading information or sensationalism. It provides practical advice and options for individuals to consider based on their financial situation. However, the article could have provided more context and examples to support the strategies mentioned.
Noise Level: 3
Noise Justification: The article provides clear and concise information on various strategies to maximize retirement savings. It includes data from reputable sources and offers actionable insights for different financial situations. However, it lacks in-depth analysis and does not explore potential risks or drawbacks of the strategies mentioned.
Financial Relevance: Yes
Financial Markets Impacted: No
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: This article provides information and strategies for maximizing contributions to retirement plans, which is relevant to financial topics.
Public Companies: Vanguard (null), Principal Financial Group (null)
Key People: Chris Chen (certified financial planner), Sri Reddy (senior vice president of retirement and income solutions at Principal Financial Group)
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