Generally, the maximum IRA contribution limits increase for 2020. For both Roth and Traditional IRA, regular contribution is now at $6,000 maximum, while catch-up contribution also increases to $7,000. This is definitely good news for everyone who have IRAs because it means that they can save up more for their future.
Why Save for Retirement?
If you haven’t already began, you may be asking yourself why today is a good time to start saving for your retirement? You’ve heard this all before – saving for retirement is one of the most common things that we usually hear from many financial advisers. However, sadly, not everyone had the chance to do this while they were young, and most people didn’t get the chance to enjoy their retirement because they had to work again to support for their needs, or worse, they had to rely on their children to support them.
Young professionals today are really encouraged to start saving for their retirement as early as possible. Even though retirement is a long way ahead, time is of the essence. The earlier that you start to save, the better. When it comes to saving for retirement, nothing beats an IRA. IRA does not only allow people to put up funds for the future, but it also allows you to grow your funds and make your money work for you. An IRA, after all, is an investment vehicle where you can easily create a diversion of your investment portfolio in order to maximize income possibility and minimize risks.
If you are one of the young professionals who have not yet started with saving up for retirement, then it would best to start with opening an IRA as soon as you can. Ask a financial expert on how to open an IRA, and of course, you have to do some research as well about the new 2020 IRA rules. It is also recommended that you choose the best IRA companies to invest with and find the best IRA rates available so to maximize your growth.
Income Limits
Everyone who earns income may make an IRA contribution. This income must be equal to or more than the amount of the contribution. Those who have non-working spouses may make a contribution for them as long as they have enough income.
The deduction is phased out between $59,000 and $69,000 of adjusted gross income for single filers covered by a company retirement plan in 2020. For married filers who are both covered by company retirement plan, the deduction is phased out between $95,000 and $115,000 of adjusted gross income. For married filers where the spouse is not covered y a company plan, the deduction for the spouse is phased out between $178,000 and $188,000 of adjusted gross income in 2020.
Roth vs. Traditional IRA
If you couldn’t decide which type of IRA to open, you better check out the differences between Traditional IRA rules and Roth IRA rules and see which one would best work for you. Just remember that with Roth IRA, your contributions are taxed right at the time they are made and your withdrawals are non-taxable. With Traditional IRA, however, taxes are paid only upon distribution.
