Maximum Allowed Contributions for IRAs Have Increased!

For the first time in four years (since 2008) the maximum allowed contributions for IRAs have increased from $5000 to $5500. I know this may not help most students right now, but it will help in the future.  This increase is for both traditional and Roth IRAs.  The income levels have been increased as well. 

Limits for Traditional IRA in 2013

If you DO HAVE a retirement plan with your employer:

• Single or head of household: If your modified gross adjusted income (MAGI) is $59,000 (up from $58,000) or less, you can take a full deduction. If more than $59,000, but less than $69,000 (up from $68,000) – you get a partial deduction. If over $69,000, you cannot take a deduction.
• Married filing jointly or qualifying widow(er): If your MAGI is $95,000 (up from $92,000) or less, you can take a full deduction. If more than $95,000, but less than $115,000 (up from $112,000) – you get a partial deduction. If over $115,000, no deduction.
• Married filing separately: If your MAGI is less than $10,000, you can take a partial deduction. If $10,000 or more, no deduction.

If you DO NOT HAVE a retirement plan through an employer:

• Single, head of household, or qualifying widow(er): Any MAGI permits a full deduction.
• Married filing jointly or separately with a spouse who is not covered by a plan at work: Any MAGI permits a full deduction.
• Married filing jointly with a spouse who is covered by a plan at work: If your MAGI is $178,000 or less, you can take a full deduction. If more than $178,000 (up from $173,000), but less than $188,000 (up from $183,000), you can take a partial deduction. If $188,000 or more, no deduction at all.
• Married filing separately with a spouse who is covered by a plan at work: If your MAGI is less than $10,000, you can claim a partial deduction. If $10,000 or more, no deduction.

Limits for Roth IRA in 2013

The 2013 Roth IRA income phaseout limits are as follows:

• Married filing jointly or qualifying widow(er): If your MAGI is $178,000 (up from $173,000 in 2012), you can contribute up to the $5,500 max. If at least $178,000 up to $188,000 (both up $5,000 over 2012), your contribution limit is phased out. If $188,000 and above, you cannot contribute to a Roth IRA.
• Single, head of household, or married filing separately and you did not live with your spouse at any time during the year: If under $112,000 (up from $110,000 in 2012), you can contribute up to the $5,500 maximum. If at least $112,000 up to $127,000 (was $125,000 in 2012), your contribution limit is phased out. If $127,000 and up, you cannot contribute to a Roth IRA.
• Married filing separately and you lived with your spouse at any time during the year:If MAGI is between $0 and $10,000, your contribution limit will phase out. If $0, you can contribute up to the $5,500 maximum. If $10,000 and above, you cannot contribute to a Roth IRA.

If you want more information check out the IRS publication 590.

 There is no way I can put away $5500 for myself and my husband.  Frankly there is no way I could put away even $5500 total.  However, once I graduate this will start being very useful to me.  We plan to say 20% once we both graduate (we are older than most students) and this will allow us to stick with IRAs to do so until we earn $55,000.  And since often the prices of mutual funds is better in an IRA than a 401k or 403b, I am very happy.    Maybe in the next two years it will have gone up even more.

Millionaire Update-September 2012

I have been a bit lax in posting my month updates for our retirement saving, but I had to post this month.  As of October 8th, we have $13,482 in our retirement savings.  This is over half of our annual wage ($26,000)!!  Granted, if we retired now, we would need to pay for health insurance ($550/month) so it is not half of our annual retirement spending, but is a lovely start.  Sadly, other than credit card rewards from FIA Card Services, we will not be putting any money in until at earliest June of 2013 because I am back in school.  However, at least .2% of our income being saved ($50 credit we normally get annually from FIA card services), is better than nothing, so we will take it.  Hopefully the market helps us as well.  Is anyone else doing creative things so get more money saved for retirement?

Why I love credit cards

I have just gone back to school, in August and we will be having a baby in January both of which mean that cash is really tight, as is time. We stopping putting money away for retirement, plus cut a bunch of other expenses to pay for my class without any extra debt. However, I am disappointed that we cannot save anything for retirement given that I am 27 and my husband is 30. But funny enough, credit cards to the rescue. Working, lab work, prepping for school, and now school all together have made my life crazy (part of why I have not been posting much), so I have been cutting back on any non-required fiscal time. However, I had some free time today so I checked my fia card rewards and lo and behold I had 15,000 reward points which gives me $150 IF I deposit it in a retirement account. So, as of October 10th my husband's Roth IRA will be $150 richer. For us, $150 is .5% of my husband's wage. It is not a lot, or even enough, but it is a start and a great help when we otherwise would not be able to put anything in.

After that, I thought about checking my discover card as I was setting up the transfer to pay it. With paying for my classes this semester I was just over the $45 required to get the $50 cvs gift card so I grabbed that too. $200 richer in about 10 minutes, not bad, not bad at all.

Credit cards can be harmful if you use them badly, but as shown above, they can also be very helpful. Which are you going to chose?