No, 2020 is not over yet. While a lot of us may wish that was the case for one reason or another, we still have to stick it out for another couple of months. But that’s not necessarily a bad thing. If this year has upended your retirement plan, you still have some time left to course-correct. Here are three moves you should make before 2020 is over if they make sense for you.
1. Contribute to your retirement accounts
Millions of Americans lost their jobs, at least temporarily, this year, and that can throw off your retirement contributions. If things are a little more stable for you now, consider bumping up your retirement contributions to make up for your missed contributions earlier in the year.
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There are a few things you’ll need to keep in mind, though. First, you’re only allowed to contribute up to $19,500 to a 401(k) in 2020, or $26,000 if you’re 50 or older. You may also contribute up to $6,000 to an IRA, or $7,000 if you’re 50 or older. Most people won’t max out their accounts, but if you typically contribute a lot to your retirement accounts, you don’t want to exceed this. Otherwise, the IRS could tax these funds twice.
You also can’t contribute more money than you earned during the year. Unemployment benefits don’t count as earned income according to the IRS. So if you only earned $15,000 at your job this year and you’ve spent the rest of the year on unemployment, the most you could contribute to all of your retirement accounts for the year would be $15,000, unless you return to work later on in the year.
2. Do a Roth IRA conversion if it makes sense for you
Roth IRA conversions change your