In the final quarter of the year, relatively younger seniors and near-retirees need to look at their tax-advantaged accounts; ones that Congress has developed for education, health care, and retirement. Some accounts have forthcoming deadlines for additional contributions for the year, while some virtually require that you decide on how much you want to save for next year soon.
Tax experts and investment advisors say that reassessing your finances for possible tax breaks is more important this year. The reason? The uncertain economy has prodded many workers into reducing or delaying contributions to retirement accounts for the year. For instance, a worker who worries about income may decide not to contribute much of this year’s salary to the company 401K plan for last year because of the suspension of matching contributions within the company. The same employee may be much more confident in his finances today, and make a lump-sum contribution to his plan to make up for lost money and time.
Your company may have required you to make decisions on your 2010 contributions to a pre-tax Roth 401K or traditional 401K last year, but you can still make up for the backlog until the year ends. Although not many openly advertise the option, many companies permit this type of change within the year – just make sure that you know the percentage limits on what you’re allowed to contribute per pay period. Also, not spreading contributions over these periods is a lot like throwing away free money because you’ll lose any employer matches.
For employer-sponsored retirement savings accounts, the last quarter of the year is crunch time when it comes to saving more for the year. Want to make amends for any missed contributions? Talk to your financial advisor, as well as someone from your company’s payroll or human resources department soonest.
Carina Smith is an author that specializes in financial topics concerning seniors. Puritan Financial Group specializes in giving seniors reliable investment tools for retirement, which will help augment what they receive from their 401K plans. For more information about how Puritan Financial Group can help you, please visit our website at http://www.puritanlife.com