Legislation raises contribution limits for older workers.
Under a bipartisan bill passed in the House, Americans could invest more in their 401(k) plans and sit on those nest eggs longer. The bill, which passed 414 to 5, is intended to boost individual retirement savings by raising contribution limits for older workers and allowing companies to offer employees a small cash bonus just for signing up for the retirement plan.
House Majority Leader Steny Hoyer of Maryland stated about the Securing a Strong Retirement Act, “By expanding automatic enrollment in employer-provided retirement plans, simplifying rules for small businesses and helping those near retirement save more for longer, this legislation will help increase Americans’ access to retirement funds and help families save for the future.”
The act requires employers with 11 or more employees to automatically enroll eligible workers in 401(k) plans at a rate of 3% of salary, which would increase annually until the employee is contributing 10% of their pay.
The plan would also make changes to how much savers can contribute if they’re near retirement, and when retirees need to pull money from their accounts. Individuals aged 62, 63 and 64 could make catch-up contributions of $10,000, up from $6,500.
There are also incentives for younger workers, and an adjustment to the “withdrawal” age that increases across the next few years until in 2032, it reaches age 75.
Student loan borrowers would also get a retirement boost via the legislation, which would basically allow employers to match student loan payments as contributions to retirement.
There are two similar bills in the Senate that address retirement savings.
As the Lord Leads, Pray with Us…
- For members of both chambers as they seek to promote investments into retirement savings.
- For wisdom for the Senate as they deliberate the bills before them.
- For U.S. workers as they determine their retirement savings strategy.
Sources: Wall Street Journal, CNBC
