With the holiday season in full swing, most small business owners find themselves focused on year-end sales and the outlook for 2015, while attempting to take well-deserved vacations and reconnect with family and friends.
Unfortunately, in the middle of the holiday craze, many business owners often overlook important tax and retirement-planning tasks that can have a significant impact on retirement savings — not to mention their tax bill next spring.
According to the IRS, Americans will require as much as 80 percent of their annual income to retire comfortably in their golden years.
This holiday season, don’t forget to check a few important items off your tax and retirement planning list that could help you reach your retirement goals and maximize your company’s bottom line.
1. Catch up on your 401(k) or IRA contributions.
As you think about presents you’ll bestow this year, take advantage of the gifts the IRS can provide, namely opportunities to contribute to an individual retirement account or 401(k) while deferring taxes.
Every year, the IRS sets new limits on retirement savings account contributions. But if you’re 50 or older, you can also make catch-up contributions. This is a gift from the government to help ensure that those approaching retirement age are as prepared as possible.
If you have a 401(k) and are 50 or older, you can contribute as an individual an additional $5,500 to your account or $23,000 in 2014. The limit will rise to $24,000 in 2015. If you’re younger than 50, you can contribute $17,500 on a tax-deferred basis to a 401(k) in 2014 and $18,000 in 2015.