"One of the best books about saving taxes I’ve ever read. It works!"
"One of the best books about saving taxes I’ve ever read. It works!"
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"In Retire Secure!, CPA and estate planning attorney Jim Lange provides a road-map for tax-efficient retirement and estate planning. This is an invaluable resource for investors and planners alike."
–Charles Schwab
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Year
2006 Action Points for Employees
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by James Lange, CPA,
JD
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The effective date for several significant
changes in retirement planning contribution options is January 1, 2006. To take full advantage of the new
tax laws, you must take action. I have put together a short and
sweet summary of what most employees should be doing now for their
retirement plans and Roth IRAs.
- Always
contribute the maximum amount to your retirement plan that your
employer is willing to match.
- If your adjusted gross income is under $150,000, make
your 2006 Roth IRA contribution of $4,000 per spouse under age 50 or $5,000 per spouse over age 50 (due April 15, 2007).
- On January 1, you may make your 2007 Roth IRA contributions (due April
15, 2008, but early contributions allow an additional 14 months of
tax-free growth).
- Take
advantage of the increases in maximum retirement plan
contribution limits.* Participants in 401(k),
403(b) and 457 plans meeting income criteria will be able to
defer $15,000 in 2006 if they are under age 50 and are able to defer $20,000 if they are are
50 or older by year end.
- If your employer has adopted the new Roth deferral feature now permitted for 401(k), 403(b) and 457 plans, consider designating your deferral to the Roth IRA portion of these plans. Since there are no income limitations, even taxpayers earning over $150,000 can participate.
*These increases
are not automatic. You must
make a specific request to your benefits office or employer that your
retirement plan contribution be increased to the new maximum allowable
contribution limit. Just
because you have always “maxed out” your retirement plan
contributions does not mean that your contribution limit will be
increased automatically.
Of
course these short suggestions are only the tip of the iceberg for
tax-savvy action points that taxpayers should be considering for the New
Year. For a more complete
discussion of these and other tax planning ideas, please see our most recent year-end tax planning article, Year-End Tax Tips for 2005 plus a Sneak Preview of the New Roth 401(k).
I am available for
speaking engagements. I present dynamic seminars for financial planners,
CPAs, attorneys, bankers and insurance professionals. I also present
excellent seminars suitable for individuals actively involved in
planning for retirement. If you are looking for a keynote speaker for
your next meeting, please call for a “planner's packet” and to talk with
me. Visit my speaking engagement page for more
information. |
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Getting the Most Out of What You’ve Got:
How to Make Your Money Last for Life – and Beyond
Jim’s tips for getting the most out of your existing IRA, retirement plans and more. You’ll automatically receive our monthly Retire Secure! newsletter to keep you up-to-date on news and issues that affect your retirement money. And, you’ll receive a bonus report titled: The Ideal Beneficiary Designation of Your Retirement Plan: Lange’s Cascading Beneficiary Plan.
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