You'll be allowed to contribute an extra $500 to your 401(k) next year.
The government will raise the contribution limit to $18,500 from $18,000 in 2018. It reassesses the limit annually.
A 401(k) is a good way to save for retirement because your money grows tax-free. But there's a limit on how much you can save each year and when you can withdraw the funds.
If your employer doesn't offer a 401(k), you can contribute to an IRA or Roth IRA to save for retirement. They have tax advantages and contribution limits, too. There's also a restriction on who can use a Roth IRA based on income.
The limit on how much you can contribute to your IRA or Roth IRA will remain unchanged at $5,500next year. But the income eligibility for a Roth IRA will rise.
Here's what you need to know for 2018.
How Much Can I Contribute To My 401(k)?
You can defer up to $18,500 from your paycheck. Those age 50 and older can save even more by making what's called a "catch-up" contribution. That's limited to $6,000 a year, for a total of $24,500. These limits don't include the matching contribution you may receive from your employer. They also apply to 403(b) plans and the federal government's Thrift Savings Plan.
How Much Can I Contribute To My IRA Or Roth IRA?
You can contribute as much as $5,500. If you're 50 or older, you can save an additional $1,000, for a total of $6,500.
Can I Contribute To A Roth IRA?
You might earn too much money to be eligible to contribute to a Roth IRA, which only allows after-tax contributions, but tax-free withdrawals. In general, you can contribute money to a Roth IRA next year if you earn less than $135,000 and are single, less than $199,000 if married and filing jointly, or less than $10,000 if married and filing separately. Written by Katie Lobosco for CNN. The-CNN-Wire ™ & © 2017 Cable News Network, Inc., a Time Warner Company. All rights reserved.
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