5 Strategies for Optimizing Your Retirement Plan From Advisor David Giertz

According to David Giertz, a top financial advisor with Nationwide Financial, 2018 will bring several changes to the basic limitations and rules of retirement savings. Limits on several retirement savings contributions will be increased in 2018, allowing individuals to add more money into these accounts and enjoy greater tax benefits in return.


Drawing from his 30 years of experience in the progressive financial services industry, David Giertz has broken down 5 of the new guidelines you need to pay attention to in 2018 regarding your retirement contributions.


  1. HSA Contribution Limits


The majority of individuals do not view health savings accounts, also known as HSAs, as an equivalent to retirement savings accounts. In reality, HSAs can actually be even better than any 401(k) or IRA. This is because HSAs are the only accounts that boast a triple tax advantage:



  • The money in your HSA account is safe from capital-gains and dividend taxes


  • Any distributions taken from the account are tax-free as long as the money is used for eligible medical expenses


  • Once you reach the age of 65, the account money can be used for anything you desire, not just healthcare. However, you will be responsible for paying income tax on the withdrawal).



These triple tax benefits mean it is excellent news that the contribution limits for HSAs will be increasing in 2018. The increased limits will now be set at $3,450 for individual HSAs and $6,900 for family HSAs.

2. Contribution Limits for 401(k) Accounts


Individuals with 401(k) accounts will be glad to learn that 2018 will bring an increased annual contribution limit of up to $18,500. Individuals age 50 and older will be allowed to contribute an addition $6,000 per year in catch-up funds, bringing their total to $24,500 per year.


  1. IRA Deduction Limits


Taxpayers with access to a retirement savings account, such as a 401(k), provided by their employers may not be eligible to deduct IRA contributions from their taxable income. Beyond a certain range, an individual's ability to deduct IRA contributions will phase out and eventually disappear. This span is $63,000 to $73,000 as of 2018 for head of household or single taxpayers. For married couples that choose to file jointly, this phaseout range will now be $101,000 to $121,000 if the employer-sponsored plan covers the contributing spouse. If the employer-sponsored plan does not cover the contributing spouse, the range is $189,000 to $199,000. Lastly, married taxpayers that are filing separately are subject to a $0 to $10,000 range.


  1. Limits on Roth IRA Income


If your annual income is beyond a certain limit, you are ineligible to contribute funds to your ROTH IRA during that particular year. David Giertz points out that these yearly limits will be slightly increased in 2018. If your status for filing taxes is head of household or single, your eligibility for contributing to a ROTH IRA will be phased out in 2018 over a yearly income range between $120,000 and $135,000. Giertz explains that this means you will only be allowed to make partial contributions depending on where your income lands in this range.


For taxpayers that are married and filing jointly, the limit range is $189,000 to $199,000 of yearly income. For married taxpayers that file separately, the range is only $0 to $10,000. If an individual's income exceeds the phase-out range based on their filing status, they are not qualified to contribute anything to their ROTH IRA for that year (aside from backdoor contributions).


  1. Limits on Saver's Credit


The Saver's tax credit (previously referred to as the Retirement Savings Contributions Credit) may be possible to claim for contributing to your retirement savings. To be eligible for this tax credit, your annual income needs to be lower than a set annual amount. These annual income limits will increase slightly in 2018. The new limits are $63,000 for married couples filing their taxes jointly, $31,500 for married-but-filing-separately couples or single taxpayers, and $47,250 for heads of households.


Final Thoughts


2018's changes to the rules of retirement savings are all around positive, so consider taking full advantage of them by increasing your contributions in the upcoming year. As David Giertz emphasizes, the more efficient you are at saving right now, the more comfortable you will be in your retirement years.