Tuesday, June 18, 2013

You can max out on both 401(k) and IRA contributions in the same year

In the days long before social media and even email listservers, my father subscribed to “private” financial circulars by mail, like the Kiplinger Washington Letter, which was quite respected in the 1960’s and 70’s.
It’s around on the web, and today I saw a short piece by Kimblery Lankford, “Maxing out on retirement contributions”, link .

She recommends maxing out both your 401(k) and IRA contributions in the same year if’ you’re working and have the capacity to make both.  She writes that you can contribute up to $17,500 to your 401(k) and $5,500 to your IRA, a total of $23,000 to shelter. 
 But to make the $5,500 contribution to the IRA you actually have to “earn money” through work (it can be self-employment) to cover it.  Social Security, annuity and investment payments don’t count.
Columnist Michele Singletary tweeted this story today. 

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