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Any thoughts on retirement plan changes and tax changes for this year?
Posted on 1/10/23 at 8:20 am
Posted on 1/10/23 at 8:20 am
Some snippets from forbes
LINK
And from the IRS website
For IRA tax benefits:
The bracket changes have been shifted upward to help people deal with the impacts of inflation so W-2 earners will get a slight tax reduction compared to 2022. Breakdown for single filers is here. You can research more depending on your own personal tax situation if you like.
I think all of these are positive changes
quote:
The bill will change the age at which Americans are required to withdraw from tax-deferred retirement accounts: raising the age to 75 from 72, and will increase contribution limits for older workers, and hopefully incentivize low to moderate wage workers to save in retirement accounts.
The age limit — known as required minimum distributions (RMD)—increases from 72 to 73 on January 1, 2023, and then to 75 on January 1, 2033.
quote:
The changes to the age are meant to reward taxpayers who have to work as they get older, as the mandatory distributions are to ensure a portion of the retirement savings are spent during one's lifetime and makes the money tax-deferred but not tax free, reports The Wall Street Journal.
quote:
The 10% penalty employees under the age of 59-and-a-half face when making an emergency withdrawal will no longer be in place for withdrawals up to $1,000 annually, though this rule won’t take effect until 2024.
LINK
And from the IRS website
quote:
The Internal Revenue Service announced today that the amount individuals can contribute to their 401(k) plans in 2023 has increased to $22,500, up from $20,500 for 2022
quote:
The limit on annual contributions to an IRA increased to $6,500, up from $6,000. The IRA catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
For IRA tax benefits:
quote:
For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to between $73,000 and $83,000, up from between $68,000 and $78,000.
The bracket changes have been shifted upward to help people deal with the impacts of inflation so W-2 earners will get a slight tax reduction compared to 2022. Breakdown for single filers is here. You can research more depending on your own personal tax situation if you like.
I think all of these are positive changes
6
Posted on 1/10/23 at 8:21 am to Powerman
Is your wife’s boyfriend on the verge of retirement?
Posted on 1/10/23 at 8:21 am to Powerman
The 529 plan changes were interesting and a nice change. Should encourage more saving.
Posted on 1/10/23 at 8:23 am to Captain Poopie Pants
quote:
Is your wife’s boyfriend on the verge of retirement?
I'm not married
Posted on 1/10/23 at 8:24 am to Powerman
They have a long way to go. Why am I limited on how much I can put into my 401k? Why is there such a small cap on the Roth income phase out? Why does social security suck so bad?
Posted on 1/10/23 at 8:29 am to Powerman
HSA contribution limit is up to $7,750 from $7,300 in 2022 as well
Posted on 1/10/23 at 8:54 am to LSUSUPERSTAR
quote:
Why does social security suck so bad?
It’s a supplemental lifeline, not a retirement plan.
quote:
Why is there such a small cap on the Roth income phase out?
I wish there wasn’t.
quote:
Why am I limited on how much I can put into my 401k?
I would like to see you have an age-limit rather than an annual limit ($22,500 at age 21, $45,000 for Age 22, etc) and the same for an IRA. This way you don’t “lose” your contributions.
But the reason for it not being higher:
$22,500 in a 401k
$6,500 in an IRA (nondeductible or Roth if you have a 401k)
$7,750 in an HSA (which can function as a second IRA, this is the family contribution limit)
Let’s say you start saving late- at age 30- but are in a good enough financial spot to save this much and invest it annually until age 65. If you’re able to average a 6% return on investment, you’re sitting on $4,535,340.67. If you’re crazy and dedicated enough to start this at 22 (youngest age for 401k is 21, but going with average college grad age, not dedicated enough to mix in younger IRA contributions), and still work til 65, again using 6%, you’re sitting on $7.6MM. I think the argument is that any higher a cap is a benefit/tax subsidy for the very well off, and I believe that is how the spirit of the limit began.
Posted on 1/10/23 at 8:56 am to Powerman
quote:
I'm not married
Least shocking thing ever posted here.
Posted on 1/10/23 at 9:00 am to Powerman
quote:
The age limit — known as required minimum distributions (RMD)—increases from 72 to 73 on January 1, 2023, and then to 75 on January 1, 2033.
quote:
The changes to the age are meant to reward taxpayers who have to work as they get older, as the mandatory distributions are to ensure a portion of the retirement savings are spent during one's lifetime
Am I missing something? How does raising the age limit ensure that some money is spent in their lifetime? Wouldn’t you have to lower the minimum mandatory age to do that? That's 3 less years that you're required to take a minimum distribution.
Posted on 1/10/23 at 9:03 am to Powerman
quote:
Any thoughts on retirement plan changes and tax changes for this year?
Here are the sane thoughts…. If you are not packing your retirement with as much money as you can during this Biden economic house of cards and it’s subsequent market instability.. you are a moron.
Ask anyone who shoved all they could into retirement during Obama’s 8 pitiful years and then looked at it in Trump year 2 and 3.
Posted on 1/10/23 at 11:13 am to Steadyhands
quote:
Am I missing something? How does raising the age limit ensure that some money is spent in their lifetime? Wouldn’t you have to lower the minimum mandatory age to do that? That's 3 less years that you're required to take a minimum distribution.
Yes you're missing something
Under this change which might not apply to everyone you aren't required to take minimum distributions for another 3 years. i.e. your money can still continue to grow in a tax protected account for those 3 years if you don't have a need to take distributions
The second part of their statement clarifies why the mandatory minimum distributions exist in the first place. This modification allows older people to defer the minimum required distributions.
Posted on 1/10/23 at 11:17 am to CleverUserName
quote:
Ask anyone who shoved all they could into retirement during Obama’s 8 pitiful years
This is a chart of the S and P 500 while Obama was in office
Things were pathetic early on because we were coming out of the great recession that happened under GWB
Posted on 1/10/23 at 12:13 pm to LSUSUPERSTAR
quote:
They have a long way to go. Why am I limited on how much I can put into my 401k?
Because the government needs some immediate tax revenue to operate. The cap was raised again and it's a good thing.
quote:
Why is there such a small cap on the Roth income phase out?
I don't make the rules but again the cap was raised and that's a good thing.
Do you normally bitch and moan about good news?
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