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Bipartisan Tax Law Would Change Retirement Savings

  • Posted by Joshua Sells
  • On November 17, 2020
  • Individual Tax Planning, Ohio Tax Attorney, Retirement Savings, Tax Law Changes

Ohio Tax Lawyer Alert: Bipartisan Legislation Will Change Retirement Plans

There is bipartisan support to make changes to retirement plans. The House Ways and Means Committee Chairman Richard Neal (D-Mass) and Ranking Member Kevin Brady (R-Tex) have introduced the Securing a Strong Retirement Act of 2020.

The Ohio Tax Lawyer opinion: This is good legislation that has a strong chance of being passed – even in a very divided Washington DC.

Ohio Tax Attorney Tax Law Alert

Automatic 401(k) Enrollment

Workers would automatically be enrolled in a 401(k), 403(b), or SIMPLE workplace plan once they are eligible. Right now, you have to opt-in.

This change means that, by default, you are enrolled automatically if your employer offers these plans.

Additionally, the law would set automatic increases to your contribution, up to a maximum of 10%. Many people fail to increase their contributions, even though they may want to have the extra retirement savings.

Our take on this is that this is a good thing. The default should be savings and the opt-out should be the “option.”

Saver’s Tax Credits

There is currently a saver’s tax credit that provides between 10% and 50% of the first $2,000 contributed to a retirement account. The new proposed legislation would expand this credit. It would now be available to taxpayers with higher incomes and it would be a flat 50% of contributions, instead of being tiered.

The maximum credit would also be increased to $1,500 and indexed for inflation.

Our take on this is that this is also a good thing. We would have liked to have seen a larger credit, but this is better than nothing.

Higher Contribution Limits

Under the proposed legislation, older American’s would be able to contribute an extra $6,500 to their 401(k). These limits would also be adjusted for inflation.

Our take on this is that this is a really good thing. Some older Americans are in a situation where they need the additional contributions to be able to have adequate savings for retirement.

Overall, this legislation gets a “thumbs up” from the Ohio Tax Lawyer staff here at J. M. Sells Law. It is rare for bipartisan legislation that actually accomplishes anything these days, so we will take it!

If you have tax law questions, feel free to ask me – I would love to help!

Ask Josh a Question

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  • Automatic 401(k) Enrollment

    Workers would automatically be enrolled in a 401(k), 403(b), or SIMPLE workplace plan once they are eligible. Right now, you have to opt-in. This change means that, by default, you are enrolled automatically if your employer offers these plans. Additionally, the law would set automatic increases to your contribution, up to a maximum of 10%. Many people fail to increase their contributions, even though they may want to have the extra retirement savings. Our take on this is that this is a good thing. The default should be savings and the opt-out should be the 'option.'

    Saver's Tax Credits

    There is currently a saver's tax credit that provides between 10% and 50% of the first $2,000 contributed to a retirement account. The new proposed legislation would expand this credit. It would now be available to taxpayers with higher incomes and it would be a flat 50% of contributions, instead of being tiered. The maximum credit would also be increased to $1,500 and indexed for inflation. Our take on this is that this is also a good thing. We would have liked to have seen a larger credit, but this is better than nothing.

    Higher Contribution Limits

    Under the proposed legislation, older American's would be able to contribute an extra $6,500 to their 401(k). These limits would also be adjusted for inflation. Our take on this is that this is a really good thing. Some older Americans are in a situation where they need the additional contributions to be able to have adequate savings for retirement. Overall, this legislation gets a 'thumbs up' from the Ohio Tax Lawyer staff here at J. M. Sells Law. It is rare for bipartisan legislation that actually accomplishes anything these days, so we will take it! If you have tax law questions,
    feel free to ask me - I would love to help! [gravityform id='31' title='true' description='true']" target="_blank">
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Copyright 2021, J. M. Sells Law, Ltd.

Tax attorney, Joshua Sells, is licensed by the Ohio Bar, is a member of the U.S. Tax Court bar, and is authorized to represent taxpayers from all 50 states before the U.S. Tax Court and the IRS. Unless otherwise specified, it is not implied that any lawyer has been certified as a specialist by an organization approved by the Supreme Court Commission on Certification of Attorneys as Specialists. Prior results do not guarantee a similar outcome.

Attorney Joshua Sells, 1392 High St 109 Wadsworth Ohio 44281 is responsible for the contents of this website.




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