Lawmakers agree that they need to find a way to help individuals increase their retirement savings. There are several bills in Congress now but the lawmakers are having trouble agreeing on the ideas.
One of the ideas is to offer part time workers the ability to participate in 401(k). If the employee works at least 500 hours annually for three years to make salary reduction contributions.
Another possibility is giving a credit for small businesses for setting up automatic enrollment 401(k)s or IRAs. The idea is to give a $500 credit annually for three years to offset startup costs.
The lawmakers are also considering raising the minimum distributions age from 70 ½ to 72 in 2023 and 75 by 2030. This would allow owners of traditional IRAs to make contributions past the age of 70 ½.
Lawmakers are really trying to pass retirement legislation sometime in 2019. This could possibly include expanding 529 education savings plans to include homeschooling up to $10,000. Which bill is passed and what is included is left to be seen. We will keep you up to date as this gets closer to being passed.
Here’s a tip for college graduates that are starting a full time job. If you’re going to work less than a total of 245 days this year you can ask your employer in writing to use part-year withholding. The standard tax withholding tables assume you’ll earn a full year’s wages to figure out how much income tax to take out. The part-year method bases withholding on what you actually earn during the year. This will boost your paycheck take home pay this year instead of waiting till 2020 to get your tax refund.
Grandparents or parents if you have a child or grandchild working during the summer you can contribute to a Roth IRA for them up to $6,000. The amount you contribute cannot exceed their earnings. The earnings growing inside the Roth IRA are tax free. The contributions can be pulled anytime tax free and the earnings can be distributed tax free after age 59 ½. Another added benefit when they purchase a house for the first time they can take out $10,000 of earnings tax free.
Payroll delinquent taxes are a top priority for the IRS. The IRS recently had a two-week campaign where they dropped in on 100 companies that have serious payroll tax issues. Criminal investigators are starting to get indictments against individuals and businesses. This will continue with focus on serial offenders whose unpaid payroll taxes are in excess of $100,000.