Category: Retirement

The Internal Revenue Service (IRS) evaluates the impact of inflation and other variables each year to determine the maximum contributions for tax-advantaged retirement plans. They have been the same for some years. However, on occasion, the IRS modifies the amount that can be saved to your 401(k) and individual retirement account (IRA) to reflect the cost of living adjustments (COLAs).

The modifications for 2023 are significant. Here is all you should know about 401(k) and IRA contribution limits for 2023 and how to maximize your retirement savings.

What Is the Maximum IRA and 401(k) Contribution?

The IRS increased the annual IRA contribution cap from $6,000 to $6,500 for 2023. The contribution cap applies to all your IRAs combined, so if you have a conventional IRA and a Roth IRA, your contributions to both accounts cannot exceed $6,500. The $1,000 catch-up payment for people over 50 is not subject to COLA increases.

The 401(k) contribution cap will rise to $22,500 in 2023 from $20,500 in 2022. The Thrift Savings Plan (TSP) of the federal government, most 403(b), and some 457 plans are all subject to this contribution cap. The catch-up payment for people over 50 increased from $6,500 to $7,500.

How to Understand IRA Income Restrictions

You can frequently deduct contributions from your income if you have a conventional IRA. However, depending on your income and tax status, the ability to deduct your IRA contributions goes away if you or your spouse participate in a retirement plan at work. You can still deduct, but not fully, when your income reaches a particular threshold. You cannot deduct any IRA contributions after you have reached the top phase-out limit.

The income limitations in 2023 are:

• For single taxpayers: phase-out starts at $73,000 and ends at $83,000.
•  Married taxpayers making payments to a spouse’s workplace plan: phase-out starts at $116,000 and ends at $136,000
•  Married taxpayers who do not have a workplace plan but whose spouse does: phase-out starts at $218,000 and ends at $228,000.

You have a stronger chance of being able to deduct payments to an IRA if you have a corporate retirement plan, most likely a 401(k), which encourages you to use more than one kind of tax-advantaged retirement account.

It’s essential to note that for 2023, the income thresholds for Roth IRA contributions have also been slightly raised.

Depending on your income and tax status, you can make contributions to a Roth IRA with income phase-outs:

• Individuals or heads of households: $138,000 to $153,000
• Married couples filing jointly: $218,000 and $228,000

For Roth IRA contributions, the income phase-out range remains zero to $10,000 if you’re married and filing separately.

Limits on 401(k) and IRA contributions: Using All Available Means

There is at least one benefit to living in inflationary times if you can take advantage of the higher IRA and 401(k) contribution limits and the additional catch-up amounts for individuals over 50.

You can boost the amount you set aside if you aren’t making the maximum contribution to your retirement account. Discuss with your human resources department the possibility of having a small portion of each paycheck deposited into a 401(k) or IRA. Even though it might not seem like much now, compounded returns over the years can significantly impact the performance of your whole portfolio.

If you are eligible, another strategy is to think about funding a Health Savings Account (HSA) to benefit from those tax advantages. Your HSA can also help you cover medical expenses when utilized as a part of a retirement plan; it may even act as a backup IRA after you turn 65.

Taking charge of your overall retirement plan

Consider consulting a retirement expert to learn how to maximize your future based on the types of accounts you are eligible to contribute to. In some circumstances, a plan that utilizes a 401(k), Roth accounts, and both traditional and Roth accounts can improve the overall tax efficiency of your retirement portfolio.

You can ensure that your retirement goals align with your other financial goals by taking a holistic approach. Think about talking with a retirement expert to get their opinion on your strategy and help you stay on course.

Contact Information:
Email: [email protected]
Phone: 2129517376

Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].

Many retirement plans fail because of seemingly minor details that have a significant impact. This article summarizes ten such minor details listed below, then follows up with in-depth articles on each.

1. Just Show Up

The days of “putting in my time” and having a successful financial life and retirement are long gone. This is especially true of the problematic concept of the Minimum Retirement Age (MRA). You’ll need an excellent strategy to make the most of your benefits.

2. Pay Your Bills First, Then Save if You Can

No! That should be reversed. It would be best if you had a barrier to separate your way of life from your income. Throughout my career, those who came out on top created and maintained that wedge. They never lived above their means; they were always slightly below. In this manner, raises and bonuses propelled them forward.

3. Borrow for Tomorrow

Loans from your tax-deferred savings account (TSP) should be your last option. However, experts believe this practice stems from a faulty cash flow plan. Note this right now: debt is not your ally. It’s a tool, but it’s not a solution. Managing and eventually eliminating installment debt is a trait I see in financially successful people regularly.

4. Silo Save

TSP is fantastic, but it is not a strategy. The most successful retirees I’ve seen have assets in traditional plans like TSP. However, they also have money in non-retirement assets. No, I don’t mean a few thousand dollars in a savings account. Once you’ve maxed out your TSP, start putting money into a regular investment account.

5. TSP Underfunding

Please don’t roll your eyes at me. Daily, I encounter individuals who agree with me that those who maximize their contributions are in the minority. A sizeable TSP balance is required if you want to retire before age 65.

6. Lose Your Equilibrium

That one was too simple and does not refer to market fluctuations, but to your TSP allocation. You can’t just set it and forget, even if you’ve established an appropriate asset mix across your TSP’s five core funds. Now, I’m not talking about trying to steer excessively. If you’ve determined that you should have 40% of your portfolio in a C fund based on your age and risk tolerance, don’t forget to review it once a year.

7. Ineffective TSP Strategy

I can hear you sigh. Twenty percent in each core fund or a small amount in all funds (yes, including all lifecycle funds) is not a winning strategy. Neither is it entirely in C (because it’s been doing so well.). Your asset allocation should accurately reflect your ability to tolerate risk in good and bad times. It is disastrous to try to time the market or, even worse, to change your investment strategy based on “what’s happening.”

8. Don’t Forget Your Umbrella

That was a no-brainer. This doesn’t mean getting wet; it means not having enough liability insurance. Nothing can derail your retirement plans more quickly than an accident followed by an adverse judgment. Check your auto and homeowners’ insurance limits today and request a quote for an excess liability umbrella.

9. Ignore the Risk of Long-Term Care

Okay,  it’s a dull subject, and the premiums keep rising (even the Fed plan). However, it remains a problem. You must assess your resources and obligations and plan a working strategy ahead of time. Will you look for in-home care? Do you think you’ll need a facility? Right now is the time to ask the tough questions! TSP balance is not a panacea.

10. Neglect the Federal Employee Group Life Insurance Plan (FEGLI)

The FEGLI is one of the best employer plans available. However, this does not imply perfection. For example, an employer plan must charge all employees the same rates for optional coverage based on age (the unsubsidized part). That means that smokers and nonsmokers, people in good health, and those in poor health all pay the same. Consequently, these plans become significantly more expensive as we age. It’s not a joke. Shopping around and comparing private sector options can save you tens of thousands of dollars over your career. You can contribute every penny you save to your retirement.

Contact Information:
Email: [email protected]
Phone: 2129517376

Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].

Once you’ve decided to retire and submitted your application, remember that what comes next might be a lengthy and involved procedure. Be patient.

Once your personnel office receives your retirement application, it’ll verify that you’re eligible to retire on the date you specify and that you’ll be able to keep your Federal Employees’ Health Benefits (FEHB) and/or Federal Employees’ Group Life Insurance (FEGLI) coverage in retirement.

Assuming no problems arise, your personnel office will create a Certified Summary of Federal Service detailing your federal civilian and military service, if any. When you get the copy from them, double-check for accuracy and make any necessary adjustments.

When the day you choose to retire approaches, your personnel office will:

• certify your FEGLI coverage to OPM if you’re qualified to keep it; 

• forward any existing beneficiary designations in your OPF;

• file an SF 50 (Notification of Personnel Action) to be separated from the service;

• complete and certify the personnel office component of your retirement application; and 

• send your retirement application and supporting documentation to your agency’s payroll office.

The payroll department will:

• approve your final salary payment upon your retirement separation. It’ll also authorize any lump-sum payment for unused yearly leave that you owe. If you’ve been offered a “buyout,” it’ll also authorize that payment. 

• certify and close out the official record of your current service, your Individual Retirement Record (IRR), unused sick leave credit for retirement considerations, pay rates and so on. The IRR cannot be closed out until your final paycheck has been delivered as it includes a list of your retirement deductions for the last work term.

• certify your yearly basic pay for life insurance reasons, if you have any, and
• forward your retirement package to OPM.

Your agency payroll office will notify you when your file has been delivered to OPM. That notice will include the registration number, transmittal and mailing dates, and payroll office number. That information is helpful if you need to check on the progress of your case after it has been submitted to OPM. If it doesn’t, you’ll have to contact them again.

The length of this procedure is determined by various factors, including the workload in your agency’s personnel and payroll departments. It may take longer, perhaps much longer, if they are understaffed and/or buried behind a mountain of retirement applications.

The processing of OPM is also affected by workload. It can become overburdened during peak seasons, such as the end of the year and early in the new year. Fortunately, they will try to give you a portion of your annuity if possible. That interim compensation will remain until your application is approved. Then you’ll get your exact monthly annuity payment, plus any catch-up payments you missed while you were on interim pay.

Contact Information:
Email: [email protected]
Phone: 2129517376

Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].

The possibility of obtaining retirement benefits premised on your civil service is one perk of working for the federal government. As a general rule, military service in the United States Armed Forces is considered creditable for the purpose of federal retirement provided it was active service rendered before separation from civilian employment for retirement, ended under honorable conditions, and performed.

However, federal employees must typically forego military retiree pay to have their military service counted toward their federal annuity and qualify for the retirement annuity.

Military retirement benefits are determined by the branch of service, not your employer or Office of Personnel Management. They are based on a service-connected impairment sustained in the line of duty during a time of war or sustained during a battle with an American enemy.

Military retired pay obtained follows 10 U.S.C. 12731-12739 (Chapter 1223) provisions, which provides retirement pay to personnel of reserve components of the military services based on age and service (active personnel).

Military service is not taken into account when determining military retirement pay.

Get a retirement estimate with and without credits for your retired army service to see whether merging your retired military service alongside your civilian employment is advantageous. Next, ascertain the size of the military deposit. Once you know this, you can decide whether the deposit benefits you. Usually, a hiring company will carry out this calculation.

Fill out Form RI 20-97 (Expected Earnings Throughout Military Service), enclose a copy of your DD 214 or D.D. 214s indicating your army duty, and mail the completed form to the relevant military finance center indicated on the form. A completed RI 20-97 or a letter outlining your anticipated military pay will be returned by the center.

Request a Military Deposit Worksheet and a Military Deposit Application from your organization (OPM 1514). Fill out the employee section of the application, and submit it to the payroll office with your DD 214(s), the OPM 1514, the document or letter outlining your expected military wages, and the OPM 1514. When the amount of the deposit is determined, that office will get in touch with you to arrange for payment.

As soon as you’re prepared to retire, you should file a waiver of your military retired wage to the relevant military finance center 60 to 90 days before the start of your civilian retirement. If you choose not to forego your military retirement income, the OPM will return your deposit with interest if you are a FERS employee and without if you are a CSRS employee. You’ll then submit the proper refund application form with your retirement package.

If the deposit is paid early, less interest is charged. If you want to pay a deposit, you must finish it before retiring. Your military service won’t count toward civilian retirement if you don’t pay the deposit or elect not to renounce military retired pay.

Contact Information:
Email: [email protected]
Phone: 2129517376

Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].

A FERS disability retirement application must undergo a protracted, arduous, and challenging bureaucratic process. So, naturally, one would like to get accepted at the process’s first (initial) stage. The second step (the “reconsideration stage”), however, is an important and significant event in the process since the U.S. Office of Personnel Management (OPM) is not easily disposed to approve a case at the first stage.

There are two significant elements provided at the reconsideration stage: First and foremost, you have the chance to address any claimed shortcomings that OPM flags. Secondly, and perhaps even more crucially, you can start to position yourself so that a U.S. Merit Systems Protection Board (MSPB) Judge can assess the merits and consistency of your case.

Since you will need to appeal OPM’s denial of your FERS Disability Retirement application to the MSPB in the third stage of the procedure if OPM rejects it a second time, the best way to approach this is to think of it as a dual-purpose reaction, as is the case with most opportunities: first as a rebuttal to OPM’s denial and secondly as a legal defense before the prospective MSPB Judge.

Additionally, OPM never informs applicants that if their application is denied a second time and an appeal is submitted to the MSPB, they would be given another “reconsideration” or “re-reconsideration.” This is because the OPM Legal Specialist representing OPM at the MSPB will automatically evaluate the whole case and re-consider it afresh from an entirely different viewpoint—than from a legally sufficient perspective—in the same manner that the MSPB Judge would see it.

The “second” point in responding to an OPM denial at the reconsideration stage is to not only correct any alleged deficiencies pointed out by OPM but also to make compelling legal arguments that point to the legally sufficient cogency of your application. Again, this is because the Merit Systems Protection Board is a legal forum rather than a bureaucratic forum.

Therefore, the Reconsideration Response should always contain a responsive legal memorandum addressing the relevant case law to prepare for the MSPB adequately. This not only makes it easier for you to defend your case in front of the MSPB Administrative Judge on its merits, but it also serves as a warning to the OPM that your case will be unbeatable in court if and when it is brought before the MSPB. Finally, prepare your case for the “real reconsideration”—the re-review before the MSPB—by speaking with a counselor who focuses on federal disability retirement legislation.

Contact Information:
Email: [email protected]
Phone: 2129517376

Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].