"These things have I spoken unto you, that my joy might remain in you, and that your joy might be full", John 15:11.
2010The Obama administration is proposing to expand and implement plans for citizens to save more for retirement. Do some research and decide whether any of the following options might be right for you and your financial situation.
• Saver's Credit: This option allows a person to deduct money off his or her tax bill, linked to donations to a retirement account. The lower the income, the higher the credit, 50% of donations up to $2,000 for singles earning up to $16,750 and $33,500 for married people filing jointly. The credit phases out at $27,750 for singles and $55,500 for married joint filers. Taxpayers at that upper end get only a 10% credit.
The President is proposing to give a flat 50% credit for the first $1,000 of contributions to retirement plans by families earning up to $65,000 and provide a partial credit to families earning up to $85,000. The administration also wants to make this tax credit refundable even if the taxpayer has no income-tax liability.
• Automatic IRA: Employers that do not offer a retirement plan may be asked to enroll employees in a direct-deposit IRA unless the employee opts out. Such a plan would, in effect, create employer-sponsored retirement plans for 78 million workers, the roughly 50% of working Americans who now don't have a plan at work.
If this plan is placed in effect, workers would automatically have 3% of pretax earnings go into an IRA. The worker could increase the amount of the automatic deposits or opt out altogether. The money would either be placed into a diversified portfolio or the worker would have the option to invest that money as he or she sees fit.
• Updating 401(k) Regulations: Mr. Obama is also calling for improving the transparency of 401(k) fees to help workers and plan sponsors make sure they are getting investment, record-keeping and other services at a fair price. Moreover, Mr. Obama wants to promote the availability of annuities and other forms of guaranteed lifetime income, which transform savings into guaranteed future income.
Talk with your HR Director, Financial Advisor, Accountant, or Attorney for more information about how to save and have more for your retirement. The more saving, investing, and financial preparations you make for retirement, the larger your monthly retirement checks will be when you begin receiving them. See Robert Powell's January 29, 2010 article in the Wall Street Journal.
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