Potentially some great news for high income METAR-ites nearing retirement! You may be able to stuff a whole lot more money into tax advantaged spaces.
For moderate or low income METAR-ites nearing retirement, bootstraps are recommended.
Another provision would lift the cap on 401(k) catch-up contributions at ages 62, 63 and 64 from $6,500 to $10,000. Factoring in employer matching contributions, that would raise the maximum 401(k) inflow to $71,000 per year. In theory, catch-up contributions are supposed to help people who couldn’t save much until later in life. But if lawmakers were genuinely concerned about retirement security for people who need it, they wouldn’t start by aiding taxpayers who can afford to save more each year than most Americans earn.
But if lawmakers were genuinely concerned about retirement security for people who need it, they wouldn’t start by aiding taxpayers who can afford to save more each year than most Americans earn.
Exactly!
The whole IRA/401k retirement system is just another way to shovel money to the top of the US economic pyramid.
I didn’t save any extra money for retirement because I had access to an IRA/40lk. It just meant that I moved money I’d be saving anyway to the tax sheltered accounts for the tax deduction. When I quit my engineering job at age 38, a bit less than half of my savings was in the IRA/401k.
If you want to help Americans’ retirement security, give everyone a $3,000 investment in an S&P 500 index fund at birth, and don’t let them touch it until retirement age.
“If you want to help Americans’ retirement security, give everyone a $3,000 investment in an S&P 500 index fund at birth, and don’t let them touch it until retirement age.”
That won’t help anyone NOW.
Maybe it would help newborns in 70 years, but what government makes 70-year plans?
And do you believe the current economic system will still be in place in 70 years?
A known macro condition will be accounted for in the cost of the standard of living in any event. So it would be to no avail.
Potentially some great news for high income METAR-ites nearing retirement! You may be able to stuff a whole lot more money into tax advantaged spaces.
The linked article does a crappy job of covering the specifics. Long on opinion, short on facts. There is also a ton of benefits for lower income taxpayers.
Those increases you quoted are no longer tax deferred under Secure 2.0. They are after tax. This provision was designed to raise tax revenue to offset the cost of other aspects of Secure 2.0.
https://www.shrm.org/resourcesandtools/hr-topics/benefits/pa…
SECURE Act 2.0 also provides that, starting in 2023, all catch-up contributions to employer-sponsored plans must be made to Roth accounts, allowing the government to tax these dollars sooner. Roth account contributions are made with post-tax dollars that can be withdrawn tax-free after retirement. Catch-up contributions currently can be made on either a pretax or Roth basis (if permitted by the plan sponsor).
Currently, the catch-up amount for individual retirement account (IRA) contributions is $1,000 (not indexed) for individuals who have reached age 50. SECURE Act 2.0 indexes this limit to inflation starting in 2023.
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Employer matching contributions designated as Roth contributions would not be excluded from employees’ gross taxable income.
So while you can contribute more, ALL catch-up dollars will now be taxed prior to contributing. Employer matching can also go to a Roth, increasing tax revenue.
Still has to get through the Senate so who knows if this provision survives.
If you want to help Americans’ retirement security, give everyone a $3,000 investment in an S&P 500 index fund at birth, and don’t let them touch it until retirement age.