If you, like many Americans, struggle to add to your retirement savings accounts, there are some changes on the horizon that are aimed at helping.
There is a new law before Congress, the Securing a Strong Retirement Act of 2021, that could help you save more – and simplify the process.
The new law would change some of the rules for retirement savings accounts – especially for people who save later in life (as well as those who are already retired).
The act has already made it through the House Ways and Means Committee and has bipartisan support. It comes on the heels of the Secure Act, which was signed into law in December 2019 and is a similar law.
So, how could this potential new law affect your retirement savings accounts?
For starters, it would automatically enroll workers into retirement accounts, unless people specifically opt out.
And it would also increase the catch-up contribution limit. Currently, workers older than 50 can make “catch-up” contributions to their 401(k) and IRA accounts equal to $6,500 for 401(k) and $1,000 for IRAs. The new law would increase that to $10,000 for those ages 62-64 – meaning older workers could get tax breaks that would help them save more.
There are also provisions in the new law to help people with student loans – allowing for employer matching funds for the amount you pay on your loans. This is critical for people who aren’t saving for retirement because they have student loan debt.
Changes to when workers can take RMDs could also come, allowing workers to take their required minimum distributions later in life. Currently, you have to take them at 72 but the new law would allow older Americans to push that back a few years – which gives people more flexibility.
Workers of all ages stand to benefit from these changes, so if you have questions about your retirement savings accounts, it’s a good idea to keep an eye on this law.
Do you still have questions about retirement planning options?
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