Your 401(k) and IRA need help, and you might be missing an opportunity to give them a boost.
The center took an online poll of 5,168 workers between Oct. 26 and Dec. 11.
“Nobody cares about your retirement more than you do,” said Catherine Collinson, CEO and president of the Center. “These are personal decisions and you live with the results.”
Don’t miss these two opportunities to step up your retirement accounts.
You might already know that you can defer up to $19,000 in your 401(k) in 2019.
However, less than half of the Gen Xers in the survey knew that they can make a $6,000 catch-up contribution to their workplace retirement account after they celebrate their 50th birthday.
About a third of participating baby boomers were also unaware that they could make that catch-up contribution, according to the survey.
“The theory is that if you’re participating in a 401(k) plan, the plan sponsors and providers are pretty good about letting people know that they’ve turned 50,” said Collinson said.
“The plan sponsor may send an email reminder and notification once or twice, and many people may not read it,” she said. “People need to be told about something more than once before it really sticks.”
Fewer than 4 out of 10 workers polled in the Center’s survey are aware of a tax credit they may receive for saving money in a 401(k) or IRA.
“People don’t like to think about taxes more than once a year, so the credit may not be top of mind,” said Collinson.
“They might also think it’s too good to be true that there’s a tax credit on top of tax-advantaged savings,” she said.
Depending on your income and your contribution, the maximum saver’s credit given can be as high as $1,000 for single filers and $2,000 for married-filing jointly. To claim this tax break, file Form 8880 with your income tax return.
Whether you’re eligible and how much of a credit you get will depend on your adjusted gross income and the amount you contributed to a retirement account.
This tax season, contributions to ABLE accounts — tax advantaged accounts for individuals with disabilities and their families — may also be eligible for the saver’s credit.
Here’s a bonus: You have until April 15 to make an IRA contribution and have it count on your 2018 taxes. Just be sure to notify the company holding your account that it’s a 2018 contribution.
“You don’t want to get dinged for excess contributions in 2019, so make sure that it applies to the year you want it to apply to,” said Lisa Greene Lewis, a CPA with TurboTax.