IT’S YOUR MONEY
IT’S TAX TIME!!
Don’t Forget to Consider
Individual Retirement
Arrangements (IRAs)
by Robert Rhinesmith
D
id you know that money you put
into your IRA may be tax deduct-
ible? With tax time here, now is a
good time to look at opportunities
you may have with your IRAs. You have
until April 18th, to put money into your IRA
for 2016, which could affect your tax return
by lowering the taxes you owe.
IRS RULE FOR CONTRIBUTIONS
Total employee and employer contri-
butions (including forfeitures) - the lesser
of 100% of an employee’s compensation or
$53,000 for 2015 and 2016, not including
“catch-up” elective deferrals of $6,000 in
2015 - 2017 for employees age 50 or older)
(IRC section 415(c))
Always contribute to your employ-
er’s retirement plan, at least up to their
match. A typical matching situation is: the
employer matches 50% of employee contri-
butions for the first 6%-of-salary that an
employee contributes – so the company will
not match more than 3% of the employees’
salary.
EXAMPLE
Company Matches Percentage of
Employee Contribution, Up to Limit:
• Sharon Smith makes $50,000 and has
elected to contribute 6% of her annual
salary to her 401(k) plan
• Sharon’s company will match 50% of her
contributions, only up to 3% of her salary
• Each year, Sharon would contribute
$3,000 (6% of her salary) to her 401(k)
plan
• Each year, Sharon’s company would
contribute $1,500 (3% of her salary) to
her 401(k) plan
• The total yearly contribution made to
Sharon’s retirement account would be
$4,500
• Even if Sharon elected to contribute 10%
of her salary to her 401(k) plan, which
would be $5,000, her company still would
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