Are you seeking more ways to save for retirement? Then make sure you know all the facts so you can make the most of your IRA contributions for 2020.
The limits for IRA contributions for the 2020 tax year are the same as those for 2019, but there are some changes to IRA rules. For instance, in 2020, there is no age limit to make contributions to your traditional or Roth IRA. Previously, you couldn’t contribute past the age of 70½.
Here we’ll help you understand what’s changed, what hasn’t, and how you can support your retirement savings in 2020.
What Are Some of the Key IRA Changes for 2020?
Aside from the removal of the age limit for contributing to your traditional or Roth IRA, changes to IRAs for 2020 include:
- Increasing from 70½ to 72 the age when someone must start taking required minimum distributions from retirement accounts. This applies only if you turn 70½ after December 31, 2019. If you turned 70½ in 2019, you must take these distributions.
- Economic relief legislation approved by Congress enables account holders to skip mandatory IRA distributions in 2020.
- The economic relief law also enables certain Americans to withdraw money—up to $100,000—from their IRAs and avoid the 10% early withdrawal penalty. This waiver applies to withdrawals taken in 2020.
What Are the IRA Contribution Limits for 2020?
The 2020 limits are the same as they were in 2019. Total contributions to all traditional and Roth IRAs cannot exceed:
- $6,000 if you’re under age 50
- $7,000 if you’re 50 or older
- your taxable compensation for the year if the compensation was less than either $6,000 or $7,000, depending on your age
The IRA contribution limit for people under 50 climbed to $6,000 in 2019, from $5,500 in 2018. The over-50 limit went from $6,500 to $7,000.
How You Can Benefit from Higher IRA Contribution Limits
To capitalize on the 2019 contribution adjustments for traditional and Roth IRAs, you might consider a Self-Directed IRA. This type of IRA lets you pick asset alternatives, such as precious metals, and thereby diversify your portfolio. It can be established as a Roth IRA or traditional IRA.
Portfolio diversification—including the addition of precious metals—can help ease your portfolio’s response to market fluctuations and boost your gains. Even a 2% allocation toward gold could improve risk-adjusted returns.
Through a Self-Directed IRA, you can add physical gold to your portfolio.
Regular IRAs are limited to only approved stocks, bonds, mutual funds, and similar vehicles. A Self-Directed IRA offers a risk-diversification option that traditional IRAs can’t compete with: the ability to hold hard assets like gold.
In particular, a Self-Directed IRA that includes gold can offer a hedge against inflation and a fluctuating dollar, and it also can deliver tax-deferred or tax-free growth while you’re saving for retirement. A variety of gold, silver, and platinum bars and coins can be set aside in a Self-Directed IRA.
“Because gold prices generally move in the opposite direction of paper assets, adding a gold IRA to a retirement portfolio provides an insurance policy against inflation,” Edmund C. Moy, former director of the U.S. Mint, told Investopedia. “This balanced approach smooths out risk, especially over the long term, which makes it a smart choice for retirement [accounts] like IRAs.”
With gold on your side, you can work toward a retirement that feels stronger and safer. Call U.S. Money Reserve at 844-307-1589 with questions about IRA contributions. We’ll provide you with a free one-on-one consultation.
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