Pensions are (Mostly) Dead--Self-fund Your Retirement


Important Notice:  Most employers don’t sponsor traditional pensions that pay a monthly income for life.  This makes you responsible for funding your own retirement plan.  The sooner you start saving, the better. To help you do that, most employers offer plans you can contribute to. If you’re self-employed, you can start your own.  These plans have various names like 401k, 403b, or Simple IRA.  To build your retirement fund, you contribute part of your paycheck.  Some employers will match your contributions, at least up to a certain amount.  Here is my annual update to help you determine the maximum amount you can contribute to various accounts and the deadline for making your contribution.

IRA Accounts

You have until April 18th to make a contribution of up to $5,500 ($6,500 if over 49 years old) for tax-year 2015.  The maximum contribution remains at $5,500 ($6,500 if over 49) for 2016. 

Roth IRA Accounts

The contribution limits and deadlines are the same as for the traditional IRA above, but you are not allowed to contribute to a Roth IRA if your income exceeds certain amounts. If you are married and file a joint return, your 2015 phase-out limits begin at $183,000 ($184,000 in 2016).  That means if your adjusted gross income in 2015 was $183,000 or less you can each contribute $5,500 ($6,500 if 50 or over).  For singles, the 2015 phase-out starts at $116,000 ($117,000 in 2016).

401(k) and 403(b) Accounts

Your maximum contribution for 2016 to these employer-sponsored accounts remains at $18,000. If you will be 50 or older by the end of the year, you can make an additional “catch-up” contribution of $6,000.  Your employer deducts these contributions from your paycheck.

SEP-IRA Accounts

You can contribute to your 2015 SEP-IRA anytime up until the due date of your tax return, including extensions.  So if you don’t file an extension, your 2015 contribution is due by April 18th 2016.  If you file a valid extension then your contributions are due before the deadline of your extension (October 17, 2016).

The maximum contribution for 2015 is the lessor of 25% of compensation or $53,000 (also $53,000 for 2016).  There is no “catch-up” contribution provision for older workers with SEP-IRA’s.


Your maximum contribution in 2016 to a SIMPLE IRA account is $12,500.  If you are age 50 or over you can contribute an additional $3,000.   Your employer deducts these contributions from your paycheck and adds a matching contribution in accordance with the plan document and IRS rules

Coverdell Education Savings Account

These plans were made permanent by the American Taxpayer Relief Act of 2012. The maximum contribution remains at $2,000.  You still have time to contribute for 2015 if you make the contribution before April 18, 2016.  There are income limits that apply to an individual contributor.  For joint tax returns, the phase-out range is $190,000 to $220,000.  For other taxpayers, the range is $95,000 to $110,000.  However, since the beneficiary of a Coverdell plan can contribute to his or her own account, a parent or grandparent with income above the limits can give the child $2,000 as a gift and the child can then make the contribution.


Kenneth B. Petersen CFP®, EA, MBA, AIFA® is an investment advisor and Principal of Monterey Private Wealth, Inc., a Wealth Management Firm in Monterey.   He welcomes questions that you may have concerning investing, taxes, retirement, or estate planning.  Send your questions to: Ken Petersen, 2340 Garden Road Suite 202, Monterey, CA93940 or email them to