As the U.S. population ages and the Social Security trust fund begins to dwindle, it is more important than ever for individuals to take steps to put away more money for retirement. A proposed bill in the House called the Securing a Strong Retirement Act (SSRA) attempts to help taxpayers do just that.
The SSRA has bipartisan support which is in short supply now that Democrats control both the White House and Congress. If it becomes law, SSRA would enable older adults to save more and incentivize younger ones to begin the habit of saving. Here are some of the key provisions of the proposed bill:
- The age for beginning required minimum distributions (RMDs) would increase from 72 to 75.
- Those 60 and older would see their catch-up contributions increase. Currently, the catch-up contributions for 401k plans are allowed for those 50 and older and are capped at $ 6,500. The new bill would increase this to $ 10,000 for those 60 and above. Going forward the catch-up contribution allowances would be indexed for inflation.
- The saver’s credit would be expanded, allowing a 50% credit on savings up to $ 3,000.
- Companies would be allowed to make matching contributions to retirement plans for those employees making payments on student loans.
- Individual’s with retirement fund balances under $ 100,000 in the year before turning age 75 would be exempt from the RMD rules.
- The bill would allow qualified charitable distributions from 401k plans and increase the annual maximum amount to $ 130,000. Currently, QCDs are only allowed from IRAs and are capped at $ 100,000. QCDs are not taxable and can count towards your RMD for the tax year made.
These are just some of the highlights of this proposed legislation. The goal of this bill would be to encourage individuals to save for their retirement. Young and old would benefit from these tax incentives.
We are committed to serving your tax preparation and tax planning needs. If you have questions about this proposed bill or any other tax matters, please do not hesitate to contact our office. We wish you the best as you pursue your retirement goals!