Oh, my goodness! Is it really possible that Congress is going to do something right? Will miracles never cease! There is a new bill in the Senate called the EARN act that has some great potential for making it easier for folks to put away larger amounts into retirement savings.
Here are some of the EARN Act’s provisions.
Increasing the age for first taking RMDs from current 72 to 75 years old instead. (For those youngsters out there, RMD stands for Required Minimum Distribution… makes folks take chunks of their retirement savings out every year, whether they need it or not.)
Indexing for inflation the $100,000 cap on qualified charitable distributions from IRAs, and the $1,000 IRA catch-up for folks 50 and up.
Letting people who are 60 to 63 contribute more to their 401(k)s and/or SIMPLE accounts. This is huge. Those ages are usually the magical high earning years, at the same time, kids are on their feet enough for the parents to actually have the ability to sock more away for quickly approaching retirement.
Also, regarding ABLE accounts, currently if you have the qualifying disability by age 26, you can open a tax-favorable ABLE account to be used for paying for necessary care. This EARN Act wants to raise the age of qualification to 46, which would make ABLE accounts available to a whole lot more folks.
This proposed Act would also bolster the Saver’s Credit for low- and middle-income retirement savers. Currently, the maximum Saver’s Credit of $1,000 ($2,000 for married) is capped at a percentage of pay-ins, depending on adjusted gross income. The new proposal would replace the credit with a 50% government match on up to $2,000 of pay-ins per person, the amount deposited directly into the taxpayer’s retirement account.
Currently part-time workers are not allowed to participate in 401(k)s, but this act would now allow that. It would also allow employers to offer student debt relief through workplace retirement plans.
One final provision that I like is offering small businesses that offer workplace retirement plans, enhanced tax credits.
I would encourage you to write your Congress and Senate representatives and ask them to pass this EARN Act. It’s almost too good to be true, but this act should be one that everybody can come together on for once. I don’t know about you, but Congress would be more popular if they worked harder to find solutions that almost everybody likes instead of using their power to hurt their political opponents.
Have you heard? Prov 30:25 says, “the ants are a people not strong, yet they provide their food in the summer.”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459. On the web at BullisAndCo.com. Also on Facebook.