Wednesday’s need-to-know money news

Today’s top story: How to get your credit disaster-ready. Also in the news: Watch your credit card rewards pile up with these 5 tips, comparing your 401(k) to the average, and what to know about buy now, pay later online loans.

How to Get Your Credit Disaster-Ready
Be financially secure when disaster strikes.

Watch Your Credit Card Rewards Pile Up With These 5 Tips
Stacking strategies.

How Does Your 401(k) Compare to Average?
How your company’s plan stacks up to the competition.

What to Know About Buy Now, Pay Later Online Loans
Pay attention to the fine print.

Q&A: How to make retirement saving a priority

Dear Liz: One thing I like about saving for retirement with an IRA is that I can wait until April 15 of the following year and then just contribute a lump sum for whatever I can afford to put in that year. Is there anything similar with 401(k)? Or do I have to have the contributions come out piecemeal with payroll deductions? I keep revising the percentages, but then there is a lag time between when I revise and when that money is taken out. It is a hassle. It would be much easier to just make a lump sum contribution at the end of the year to my 401(k).

Answer: Many people have unpredictable incomes and variable expenses that make planning tough. If you have a steady paycheck, though, you’d be smart to pay yourself first by making your retirement contributions a priority.

It’s generally smart to contribute at least enough to get the full company match, even if that means cutting back elsewhere. Matches are free money that you shouldn’t pass up. If you can contribute more, even better. For many people, retirement plan contributions are one of the few available ways they can still reduce their taxable income.

If you discover after the end of the year that you could have put in more, you can still make a lump sum contribution to an IRA. Since you have a plan at work, your contribution would be fully deductible if your modified adjusted gross income is less than $64,000 for singles or $103,000 for married couples filing jointly. The ability to deduct the contribution phases out so that there’s no deduction once income is above $74,000 for singles and $123,000 for couples.

Thursday’s need-to-know money news

Today’s top story: Is better credit worth exposing your banking data? Also in the news: The average 401(k) balance by age, 8 common and costly homebuying myths, and why debt collectors may soon be able to text you.

Is Better Credit Worth Exposing Your Bank Data?
Other ways to build credit.

The average 401(k) balance by age
Balances typically increase as you age.

8 Common and Costly Homebuying Myths
Don’t get trapped.

Why Debt Collectors May Soon Be Able to Text You
And email you.

Friday’s need-to-know money news

Today’s top story: Hit with a tax penalty? The IRS might give you a do-over. Also in the news: Why your 401(k) just got more valuable, how to capture savings on professional photography, and how to talk about money on the first date.

Hit With a Tax Penalty? The IRS Might Give You a Do-Over
How the penalty-abatement program works.

Your 401(k) Just Got More Valuable
New tax laws change the deduction game.

How to Capture Savings on Professional Photography
Pay less for a lifetime of memories.

How to Talk About Money on the First Date
Breaking the financial ice.



Your 401(k) just got more valuable

If your tax refund this year was disappointing, you may be able to do something about it: Contribute more to a retirement fund.

Tax-deductible contributions to 401(k)s, IRAs and other retirement accounts are among the few remaining ways to reduce taxable income if you don’t itemize deductions. And few of us do these days: Only about 1 in 10 taxpayers is expected to itemize now that Congress has nearly doubled the standard deduction, tax experts say. That’s down from about 1 in 3 before the law changed.

As a result, many of the traditional tips and tricks for reducing tax bills either no longer work or are of limited help.  In my latest for the Associated Press, how to use your 401(k) to reduce your taxable income.

Friday’s need-to-know money news

Today’s top story: How to give money advice that sticks. Also in the news: 3 steps to spring clean your credit card debt, how to research 401(k) funds on Morningstar, and using a loan to pay your tax bill.

How to Give Money Advice That Sticks
Focus on what you say and how you say it.

3 Steps to Spring-Clean Your Credit Card Debt
Scrub that debt away.

How to Research 401(k) Funds on Morningstar
Navigating the investment research company.

Should You Use a Loan to Pay Your Tax Bill?
Check the interest first.

Wednesday’s need-to-know money news

Today’s top story: 3 steps to spring clean your credit card debt. Also in the news: Trading privacy for car insurance discounts, how to improve your 401(k), and 4 ways to get a low-interest credit card.

3 Steps to Spring-Clean Your Credit Card Debt
Spring is finally here.

Should You Give Up Privacy for Car Insurance Discounts?
Being watched for a discount.

How to Improve Your 401(k)
Dealing with limited options.

4 Ways to Get a Low Interest Rate Credit Card
Get ready to negotiate.

Wednesday’s need-to-know money news

Today’s top story: These 4 tax scams could really cost you. Also in the news: 3 times you can pay taxes with plastic and come out ahead, how to decide between investing in a 401(k) or a Roth 401(k), and the 5 best free money-management apps.

These 4 Tax Scams Could Really Cost You
Here’s how to avoid them.

3 Times You Can Pay Taxes With Plastic and Come Out Ahead
Maximizing your rewards.

Should You Invest in a 401(k) or Roth 401(k)?
Deciding which is best.

The 5 Best Free Money-Management Apps
Managing your finances by phone.

Thursday’s need-to-know money news

Today’s top story: The average 401(k) balance by age. Also in the news: Taking the next step with your student loans, 3 money tasks to do right now, and what to do with all the tax documents you’re receiving.

The Average 401(k) Balance by Age
How do you match up?

Take the Next Step With Your Student Loans in 2019
Setting small goals.

3 Money Tasks You Need to Do Right Now
Starting the year off right.

What to Do With All the Tax Documents You’re Getting Right Now
What to keep and what to toss.

Q&A: Why do 401(k) and IRA contributions have such different rules?

Dear Liz: Can you please explain to me why the IRS allows an employee in a workplace 401(k) to contribute $19,000 but a wage earner without a 401(k) can contribute only $6,000 to an IRA? This seems grossly unfair. Why does one group get to save three times as much for retirement?

Answer: Congress works in mysterious ways, and this is far from the only weird byproduct of tax law.

The 401(k) and the IRA were created through different mechanisms.

The 401(k)’s birth was almost accidental. Benefits consultant Ted Benna created the first 401(k) savings plan in 1981, using a creative interpretation of a section of IRS code. Benna crafted the plan to provide an alternative to cash bonuses, not to replace traditional pensions — although that’s what it ended up doing.

IRAs, by contrast, were created deliberately by Congress in 1974 to provide a way for people to save independent of their employers.

Raising the IRA limit would be costly to the budget, while decreasing 401(k) limits would be unpopular, since so many people rely on them for the bulk of their retirement savings.

You aren’t, however, limited to saving only $6,000 annually for retirement. You can always save more in a taxable account. You wouldn’t get the tax deduction for contributions, but your investments can qualify for favorable long-term capital gains treatment if you hold them for at least one year.