Reforming Retirement Saving

"Change is evident" and with that said we are about to see a shift or rather an addition to retirement options available to low income and middle class earners. The rational for change originated under the "Senate’s Enhancing American Retirement Now (EARN) Act and the House’s Securing a Strong Retirement Act (Secure 2.0). Both bills were ultimately reconciled and included in the spending bill. Some of the changes will begin taking effect in 2024..." (Tax Foundation - December 2023).

What is in the pipeline will increase the limits taxpayers can contribute to their retirement portfolio. First, in 2023 persons 50 years and older will have an additional $1,000.00 to increase the amount allowed, tax free, deposited into their ROTH IRA account. The additional increase brings the total allowable amount to be $7,500.00 annually. Second, in 2025 an additional contribution to the tune of "50 percent of the ordinary catch-up amount for 2025, and indexed to inflation" will allow tax-payers more money to save. The qualifying age is between 60 and 63 years old and contributions can be made to either their 401(k) or IRA account(s). Third, Required Minimum Distributions (RMD) currently set to be taken at age 72 will be extended to 73 years old in 2023; While in 2033, the age increase to 75 years old.

If Secure 2.0 is allowed to bear fruit, then it is going to be an additional option available to taxpayers but by no means is a golden ticket to retirement. You still have to be disciplined in making monthly contributions, taking advantage of the maximum 401(k) contributions of $22,500.00 for 2023 with an additional $7,500.00 as catch-up - mustard with that?

Any questions, text or call (862)275.9984 and schedule an appointment.