Advertisement
savings

Top Off Tax-Advantaged Accounts by Year's End

Stash more cash in retirement and college savings plans.

While the year is winding down, there’s still time to top off tax-advantaged accounts.

Thinkstock

Retirement savings plans. In 2016, you can stash up to $18,000 in your 401(k) or similar workplace plan, or $24,000 if you’re 50 or older by the end of the year. Contributions aren’t included in your taxable income, so this is one of the most effective ways to lower your 2016 tax bill.

Advertisement - Article continues below

529 college-savings plans. These state-sponsored plans allow you to save for a child’s college education. Earnings are tax-free as long as the money is used for qualified educational expenses. Contributions won’t reduce your federal tax bill, but 32 states allow you to deduct all or part of your contribution on your state return. In New York, for example, a married couple can deduct contributions of up to $10,000 to the state’s 529 plan. (See The Best List for our favorite 529 plans.)

SEE ALSO:

7 Smart Ways to Lower Your Taxable Income

p>

ABLE accounts. These plans, created in 2014, are designed to allow parents and others to save for a disabled young person’s future needs, such as assisted living, home modification and special wheelchairs. Beneficiaries must have developed a qualifying disability before age 26. Up to $14,000 a year can be contributed to the owner’s account. As with 529 plans, there’s no federal deduction, but states can okay a break for their residents. Nebraskans, for example, can deduct contributions of up to $10,000. Only four states have plans up and running, but more are in the works. You can find more information about ABLE accounts at the ABLE National Resource Center, www.ablenrc.org.

Advertisement
Advertisement

Most Popular

18 Things You Can't Return to Amazon
Smart Buying

18 Things You Can't Return to Amazon

Before tossing these items into your virtual shopping cart, be sure to read Amazon's return policy first.
September 17, 2020
Election 2020: Joe Biden's Tax Plans
taxes

Election 2020: Joe Biden's Tax Plans

With the economy in trouble, tax policy takes on added importance in the 2020 presidential election. So, let's take a look at what Joe Biden has said …
September 18, 2020
Insurance for Long-Term Care at Home
retirement

Insurance for Long-Term Care at Home

In the wake of COVID-wracked nursing homes, increasingly more people are looking at options to age in place with long-term care insurance.
September 17, 2020

Recommended

Insurance for Long-Term Care at Home
retirement

Insurance for Long-Term Care at Home

In the wake of COVID-wracked nursing homes, increasingly more people are looking at options to age in place with long-term care insurance.
September 17, 2020
A Step-by-Step Guide to Being an Estate Executor
retirement

A Step-by-Step Guide to Being an Estate Executor

Whether you’re planning ahead for your own heirs or have been asked to serve as an executor of an estate for someone else, it pays to understand what …
September 17, 2020
Medicare Basics: 11 Things You Need to Know
Medicare

Medicare Basics: 11 Things You Need to Know

There's Medicare Part A, Part B, Part D, medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare --…
September 16, 2020
10 Things You'll Spend More on in Retirement
retirement

10 Things You'll Spend More on in Retirement

From reading materials to debt, the demands on your savings during your golden years might surprise you.
September 16, 2020