Retirement Benefit Changes for 2014
WASHINGTON (12/31/13)--If you are retired or plan to retire in 2014, look for modest but significant changes to your retirement accounts, Social Security, Medicare, and access to private health insurance (U.S. News Dec. 16).
Here are changes to expect for the coming year:
- More health insurance choices and possible cost savings. If you retire before you reach age 65, you can't be charged extra because of your health status. The Patient Protection and Affordable Care Act (ACA) offers insurance plans not available to you in 2013, as well as premium subsidies for applicants whose income is less than $45,960, or $62,040 for couples.
- Decrease in costs for generic prescription drugs in the coverage gap. The ACA is closing the Medicare Part D coverage gap by gradually reducing your share of the cost from 79% in 2013 to 72% for generic drugs.
- Bigger Social Security checks. Social Security benefits are going up 1.5 % due to a cost-of-living adjustment. The average monthly Social Security benefit will increase by $19 for individuals and $31 for couples if both receive benefits.
- Social Security tax payment increase. The taxable maximum amount of earnings for workers who pay into the Social Security system will increase to $117,000. This will affect about 6% of the 165 million people who pay into Social Security.
- Retirement plan contribution limit increase. The total amount of allowable contributions to your defined contribution plan has increased to $52,000.
- Retirement plan benefit limit increase. The top benefit from a defined benefit plan has increased to $210,000 or the average of your three highest years' compensation, adjusted for inflation, whichever is less.
- Roth IRA income limit increase. The amount you can contribute to a Roth IRA is phased out at certain levels of modified adjusted gross income (AGI). The modified AGI phase-out range for Roth IRAs will climb by $2,000 for singles and heads of household and $3,000 for married couples.
- Higher income limit to claim the saver's credit. Retirement savers are eligible for the saver's tax credit. The income limit increases by $500 (individuals and married individuals filing separately), $750 (heads of household) and $1,000 (married couples filing jointly).
Your credit union IRA specialist can help you sort out your retirement account options, as well as help you consider possible alternatives. For related information, read "Four Year-End Tips for IRA Owners" in the Home & Family Finance Resource Center.