Make the most of
tax-advantaged accounts

 
These peak earning years are the best time to maximize tax-advantaged contributions and provide the opportunity to strengthen your portfolio.

Boost your 401(k) contributions

If your employer offers a 401(k) plan, make participating in that a top priority and take full advantage of any employer match. Contribute as much as you can, up to the limit set by the IRS ($18,000 in 2017 or $24,000 if you're over 50; $18,500 in 2018 or $24,500 if you're over 50). You might also consider a contribution to a traditional IRA or Roth IRA, up to the IRS limit of $5,500 ($6,500 if you're over age 50).
Sign up for automatic payroll deductions if your employer offers it, which can make investing easier. And if you get a raise or bonus, think about using a portion for your retirement contributions instead of spending it.
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Retirement savings: The big difference a little bit extra could make
Just 1% difference in contributions can help maximize tax advantages.
Source: 2016 DST Systems Inc.

Changing jobs? Don't forget your retirement plan

When you take a new job, you'll need to decide what to do with the funds in your old retirement plan. A rollover IRA lets you:
  • Consolidate retirement investments from multiple 401(k) and 403(b) plans left at previous employers.
  • Maintain the tax-deferred status of your retirement investments
  • Access a full range of investment choices which may include many of the same (or similar) investments found in your current portfolio
You may be able to roll your existing investment account over to a Traditional or Roth IRA, roll it over to a 401(k) at a new employer, take a distribution or leave the account where it is, depending on your unique financial needs and retirement goals. Each option presents different benefits and limitations with regard to available investment choices and services, fees and expenses, withdrawal rules, required minimum distributions, tax treatment, and protection from creditors and legal judgments. Additionally, there are limits to how often and when you can rollover your
account.1
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Even a non-working spouse can help save for retirement

If you're married and file taxes jointly, you may be eligible to contribute to a traditional or Roth IRA on behalf of a non-working spouse (up to IRS limits). This can be a smart way to boost your household's tax-advantaged retirement assets.
If your spouse is self-employed with some income, consider a SIMPLE IRA or SEP IRA, which may have higher contribution limits depending on how much your spouse earns.
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Complete your retirement picture with taxable investments

Because 401(k)s and IRAs are tax-advantaged accounts, they're powerful vehicles for pursuing your retirement investment goals. But there are contribution limits, and as you earn more and your retirement goals become clearer, you may find that a taxable account can help you pursue the retirement you envision.
Taxable accounts have no contribution limits or withdrawal restrictions and, unlike Traditional IRAs and 401(k)s, there's no tax on the principal when you withdraw it. And even in a taxable account, there are ways to possibly reduce your tax burden:2
  • Hold investments for more than one year to lessen the impact of capital gains taxes
  • Consider tax-efficient investments like index funds and tax-free bonds
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Footnote 1 You have choices for what to do with your employer sponsored retirement plan. Depending on your financial circumstances, needs and goals, you may choose to roll over an existing investment account to an IRA or convert to a Roth, roll it over to an employer sponsored plan from a prior employer to an employer sponsored plan at your new employer, take a distribution or leave the account where it is. Each choice may offer different investment options and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment and provide different protection from creditors and legal judgments. These are complex choices and should be considered with care. Visit To learn more about Merrill Edge rollover IRAs, visit http://www.merrilledge.com/retirement/rollover-ira or call a Merrill Edge rollover specialist at 888.637.3343 for additional information about your choices.

Footnote 2 Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

Did you know that there are two ways to move assets from one IRA to another? The most common is a transfer. This is when you transfer assets from an IRA held at one financial institution to an IRA at another. You may directly transfer assets between investment firms as frequently as you wish. The second, less common approach is called a rollover. Rollovers occur when you withdraw assets from an IRA and then "roll" those assets back into the same IRA or into another one within 60 days. IRS rules limit you to one rollover per client per twelve month period. If you have questions or want to learn more call 888-MER-EDGE or consult a tax advisor.

A direct rollover occurs when you request that a rollover check be made payable directly to the new custodian for the benefit of your individual retirement account (IRA) or employer-sponsored retirement plan. A direct rollover is not subject to current tax or penalties.

An indirect rollover occurs when you request that a rollover check be made payable to you, after which you deposit the money into your IRA or another employer's retirement plan within 60 days. When such a distribution is made by the plan, the plan is required by law to withhold 20% of the taxable amount for prepayment of federal income taxes. If you wish to rollover the entire distribution, you must make up the 20% withholding out of your own funds, or you will be subject to income taxes and possibly early withdrawal additional taxes on the shortfall. If among other things you fail to complete the rollover within 60 days, all the money distributed to you will be taxable and a 10% additional tax for early withdrawals may apply.

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