BRIDGEPORT, W.Va (WDTV)- Question: I’ve just received a pay raise, and want to max out my retirement savings for 2018. What are the limits I can save?
Answer (John Halterman, Beacon Wealth Management): "Gillian, you know I love to hear people talk about maximizing their savings. Good for you, I love it that you are thinking ahead.
Let me tell you couple things that are actually going to be changing, actually in your favor. Right now you can only put $18,000 a year into a 401(k) or 403B or 457 type plan. So, starting in 2018 you will actually be able to increase that by $500 a year. You’ll now be able to do $18,500. If you’re over the age of 50 it is still going to be a $6000 catch up, but again that’s $24,500.
Another good thing that’s happening, IRA payout limits are going to become higher. If you are single person, making $100,000, you will be able to put in $5500 into a Roth IRA. If you make more than that, it’s OK because what you can do is what we call the back door Roth IRA. What that means, you don’t qualify for a straight Roth IRA, so what we would do is put money into a nondeductible IRA and then you would convert that to a Roth. What that ultimately does is gives you additional tax free retirement savings.
Between the 401K and the Roth IRA you will be able to save a lot of money in 2018."