5 changes to retirement savings for 2018
Annual contribution limits for 401(k) plans have been raised to $18,500 this year, with catch-up contribution limits capped at $6,000, according to this article on Motley Fool. Clients who file as single or head of household cannot contribute to a Roth IRA if their annual income exceeds $120,000-$135,000. The phase-out range for IRA deduction limits has also been raised to $63,000-$73,000 for singles and heads of household. A health savings account can be a better retirement savings vehicle than 401(k)s and IRAs, as an HSA offers deductibility of contributions, tax-free growth on savings, and tax-exempt withdrawals for qualified medical expenses.

Source: Bloomberg

How the tax changes affect retirees and pre-retirees
An expert says that taxpayers, particularly seniors, are less likely to itemize tax deductions on their 2018 returns as it will be more convenient to claim the standard deduction, which is also doubled under the new law, according to this article on Morningstar. "With the larger standard deduction you're still going to have some of those expenses you incurred during the year that are considered deductible but aren't big enough to get you over the threshold," writes the expert. "Instead of bumping up right up to it every year and never really getting the benefit of those expenses, you try to bunch them into one calendar year."

You can pay $0 in taxes on your retirement income
Careful financial planning is key to generating income in retirement without tax liability, according to this article on Kiplinger. For example, in addition to tax deductions and personal exemptions, retirees may want to invest in taxable accounts, where interest, dividends and long- term capital gains may be subject to favorable tax treatment, especially if they are in a low tax bracket. Doing a periodic Roth conversion is also recommended if they have 401(k) plans, traditional IRAs and lower cash-flow needs, as the Roth provides tax-free distributions in retirement.

Many millennials now have $100,000+ in retirement accounts. Here's how they did it
An analysis by Fidelity Investments has found that the average balance of retirement accounts owned by millennial investors stood at $109,400 at the end of June 2017, according to this article on Money. Millennials must have been saving consistently in their retirement accounts, experts say. “Saving slowly and methodically while keeping expenses low will generally get you where you need to go. You don’t need to shoot for the sky. All you need is a long series of incremental wins,” says a certified financial planner.

Should tax reform change how you save for retirement?
The new tax reform law has not drastically changed the way people save for retirement, but there are a few tweaks that may affect their saving strategies, according to this article on U.S. News & World Report. For example, retirement investors who converted some of their retirement assets into a Roth are no longer allowed to undo the conversion starting this year. Clients are advised to make the most of their tax-favored retirement accounts and focus less on future tax changes, says an expert.

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