Posted on 11/02/2024 4:38:03 AM PDT by Libloather
Older workers can now put more savings than ever into their 401(K) accounts, under new rules starting in 2025.
Every year, the Internal Revenue Service (IRS) announces the maximum amount savers can put in their workplace retirement account, which is adjusted for inflation.
Americans over the age of 50 are also able to put extra cash into their retirement savings with catch-up contributions.
From next year, workers specifically between the ages of 60 and 63 will have a higher catch-up contribution limit, the IRS announced Friday.
The change is designed to help boost the savings pots of people in their early 60s, who may not have put enough money away earlier in their lives or may have dipped in and out of the workforce to have a family.
Starting in 2025, workers between the ages of 60 and 63 can make a catch-up contribution of up to $11,5000 into their 401(K).
This means that people who turn those ages sometime during next year will be able to put up to $34,750 into their workplace retirement plans.
That is about 14 percent more than in 2024, and marks the biggest change to 401(K) contribution rules in two decades, The Wall Street Journal reported.
The change comes amid a series of inflation adjustments made by the IRS, which the tax authority does every year.
It also announced the maximum amounts people of every age can save into their retirement accounts in 2025.
Americans aged under 50 can contribute up to $23,500 to their 401(K) plans next year - which is up $500 from 2024.
Those aged between 50 and 59 can contribute $31,000 overall, those aged between 60 and 63 can add $34,750 and over-64s can add $31,000.
(Excerpt) Read more at dailymail.co.uk ...
[ Insert “It’s a trap!” meme ]
401(K) is not the best way to save.
You get penalties for early withdrawal, and you will get hurt at the old age.
When you reach certain age, you are forced to withdraw, even if you do not need to. The tax rate on 401(K) withdrawal is like ordinary income, so you may end up paying a lot of taxes during retirement, paying large Medicaid premiums, etc.
Some 401 (K) are OK, especially, if you get employer match, but too much is not good.
Straight investment in stocks and funds let you tax lot of your income in long term capital tax rates, which, except for one, complicated exemption, is not available on 401(K) withdrawals!
Fattening up the savings accounts so Democrats can seize them in the future under the guise of government provided retirement payments.
LOL!! What savings?
By the time your 64, you need to start rethinking 401K contributions because of the Required Minimum Distributions that will hit in your 70s. Need to probably start winding it down so you don’t get forced to take too much out, which could drive you to a higher tax bracket.
Now, tell me again just “why” the IRS gets to tell any American how much they can save into an HSA, into an IRA, into a 401K?
Sure. “You” want to restrict how much of a tax deduction or how much a tax write off a person can make in any given year? Don’t like it, but fine. Put a limit on the tx side.
But why is the IRS penalizing Americans who save “too much” into an HSA account for their family?
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