1. Why Maximize Contributions?
MAXIMIZING CONTRIBUTIONS
Why Maximize Contributions?
Tax-sheltered growth
Tax benefits for contributions
Tax savings now (pretax contributions)
Tax savings later (after-tax contributions)
Many people ask, “What is the maximum I can contribute to my retirement plan?” We’ll look at that in a minute, but first let’s examine why you would even want to maximize your retirement plan instead of contributing to some other investment, if your goal is to save for retirement.
First, it simply means more income to you when you retire. The more you save, the more you have.
Second, you have the option of paying less taxes today. Your contributions can come off your paycheck before income taxes are calculated. That means less income to pay taxes on. In addition, you won’t be paying taxes on the growth of your money until you actually withdraw it. That means no annoying 1099 interest income forms to report on your yearly tax returns while the money is accumulating.
Another option would be making your contribution on an after-tax basis. One way of doing this is by utilizing the Roth elective deferral. The biggest benefit of this is felt at retirement. Although the initial contributions are made with after-tax dollars, they grow tax-deferred and are withdrawn tax-free at retirement, assuming they are a qualified distribution.
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2. Employer-sponsored Plans 2015 Maximum Contribution Limits
MAXIMIZING CONTRIBUTIONS
Employer-sponsored Plans 2015 Maximum Contribution Limits
Up to $53,000
So how much can you contribute? In terms of your ________ retirement plan, the total contributions can be as much as 100% of includable compensation, up to $53,000 this year!
Your employer can put in all of that amount, or you can elect to put in a portion of it from a salary reduction agreement. (Note: For 403(b)(9) Retirement Plans, the plan document may limit employer contributions below the IRS limit.)
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3. Employer-sponsored Plans 2015 Maximum Contribution Limits
MAXIMIZING CONTRIBUTIONS
Employer-sponsored Plans 2015 Maximum Contribution Limits
Employees with 15 or more years of service may have even higher limits.
Employees age 50 and above — $6,000 additional catch-up contribution.
Up to $53,000
$18,000 (or 100%) salary reduction
The maximum you can do through a salary reduction agreement is $18,000, or 100% of your includable compensation, whichever is less.
If you have 15 or more years of paid full-time Southern Baptist service, you may be able to contribute another $3,000. Call GuideStone Financial Resources for a free maximum contribution limit calculation.
Beyond these limits, participants age 50 and above may contribute an additional catch-up contribution of up to $6,000.
Please note that these are just the limits for 2015.
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4. Employer-sponsored Plans 2015 Maximum Contribution Limits
MAXIMIZING CONTRIBUTIONS
Employer-sponsored Plans 2015 Maximum Contribution Limits
Special note for ministers: Your limit could be up to 100% of compensation.
Example
Taxable pay $24,000
Housing allowance - 12,000
Salary reduction - 12,000
Taxable income $
It used to be that ministers often had to choose between taking the maximum allowable housing allowance or contributing to the Church Retirement Plan. But not anymore! Now that the percentage limits have been raised to as high as 100% of includable compensation, you may do both. Here is an example of how it works.
Remember, this example is only for federal income tax withholding. Social Security taxes are still counted on housing allowance. (Housing allowance is subject to self-employment taxes if the minister has not opted out.)
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5. Traditional and Roth IRAs 2015 Maximum Contribution Limits
MAXIMIZING CONTRIBUTIONS
Traditional and Roth IRAs 2015 Maximum Contribution Limits
$5,500 individual/spouse
$1,000 catch-up (age 50 and above)
How about IRAs? Many individuals and their spouses contribute to Traditional and Roth IRAs.
Each individual can contribute up to $5,500 of includable compensation.
(Speaker’s note: Depending on the situation, you may want to remind the audience that all contributions may not be deductible.)
If they are age 50 and over, they can contribute an additional $1,000 on top of that.
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