FINANCE

Enjoying the Ride: Take it to the limit so you can take it easy!

BY SCOTT BROWN

EBS CONTRIBUTOR

I find that if I don’t have a plan it creates a lot of unnecessary stress! It doesn’t matter if were talking about a plan for your business, your family, an upcoming vacation or a hike or bike ride, I prefer to have a plan so that I can attempt to alleviate any additional anxiety. When I don’t, it reminds me of the Eagles hit song “Take It Easy;” ”Well, I’m running down the road, trying to loosen my load, got a world of trouble on my mind …” When it comes to saving for retirement, the same applies—you need to have a plan.

One way to reduce your angst about retirement is to strive to max your retirement plan contributions. This reminds me of another great Eagles song, “Take it To The Limit.” In order for you to max your retirement savings, it helps to know what the IRS Code section 415 Qualified Retirement Plan Limits are for 2021.

Let’s begin with the most common employer sponsored plans 401(k)/403(b) and 457. In 2021 you can contribute $19,500 to your plan. If you are age 50 or older your catch-up limit allows you to contribute another $6.500 brining your grand total to $26,000. The Simple IRA plan deferral limit is $13,500 and allows for a $3,000 catch-up for participants 50+ years of age, which totals $16,500. The total defined contribution 415 limit on all combined contributions per participant or beneficiary is $58,000 in 2021.

For both Roth and Traditional IRA’s your contribution limit for 2021 is $6,000. Again, if you are 50 or older you have a catch-up for your IRA contributions and that is $1,000 for a total of $7,000 this tax year. Keep in mind, you still have until tax-filing day to make IRA and some other qualified retirement plan contributions for tax year 2020. If you are a parent or grandparent of children or grandchildren with earned income, don’t forget that you could consider helping them make or even maximize their retirement plan contributions assuming you are financially able and so inclined. Obviously, if you own and operate a family business, you could consider contributing part of your family members compensation to retirement plan contributions each year.

Regardless of your station in life, make a plan and begin saving. Remember, as many investors have advised, it is time in the market that builds returns, not timing the market. So start early and save often! Of course, it can’t hurt to attempt to take your contributions to the limit so you can take it easy in retirement and enjoy the ride!

Scott L. Brown is the Co-Founder and Managing Principal of Shore to Summit Wealth Management. His wealth management career spans more than 25 years and he currently works and lives in Bozeman, MT with his wife and two sons.

Wells Fargo Advisors Financial Network did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The opinions expressed in this report are those of the author(s) and are not necessarily those of Wells Fargo Advisors Financial Network or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy Wells Fargo Advisors Financial Network and Shore to Summit Wealth Management are not legal or tax advisors. You should consult with your attorney, accountant and/or estate planner before taking any action.

Investment products and services are offered through Wells Fargo Advisors Financial Network, LLC (WFAFN), Member SIPC. Shore to Summit Wealth Management is a separate entity from WFAFN. Shore to Summit Wealth Management is located at 105 E. Oak Street, Unit 1A Bozeman, MT 59715 # 406-219-2900