Watch & Learn! Changes in federal law will soon open up 401(k) and workplace retirement savings plans to more workers
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About two-thirds of workers have access to an employer-sponsored retirement plan, according to the U.S. Bureau of Labor Statistics. And, a recent Fidelity report finds participants in company-sponsored 401(k)s and 403(b) plans, offered by non-profits, education, and government agencies, had an 11% increase in their savings from a year ago.
Now even more workers may be able to access these plans. Under the federal government’s original Secure Act, starting in 2024, employers must extend eligibility for the company’s retirement plan to part-time employees who work at least 500 hours per year for three consecutive years.
Starting in 2025, the Secure 2.0 Act will reduce the work requirement to two years, including 401(k) and 403(b) plans. Companies have already been required to grant 401(k) eligibility to employees who work at least 1,000 hours a year.
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“Saving for retirement – that is indeed men’s number-one financial goal. For women, it’s number four…Her number-one goal is to build wealth because she’s been left behind.”
–Sallie Krawcheck, Ellevest CEO
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Millennials have the largest share of credit card delinquencies
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Millennials have the largest share of credit card delinquencies, according to the Federal Reserve Bank of New York. Borrowers between the ages 29 and 43 who are newly late on their payments, now exceed 2019 levels, before the Covid-19 pandemic. All other generations are at or near their 2019 averages.
Even though the increase in delinquencies can be seen across income groups and regions, it is disproportionately driven by millennials, especially those with auto or student loans, and those with relatively higher credit card balances.
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Now is a good time of year to take stock of your finances and make any adjustments before the year ends.
Review your retirement savings. While there’s not much time to boost employer-sponsored retirement plan contributions for this year, if you have some extra money you can take out of your paycheck, hurry to do that now. On the flip side, if you had multiple jobs this year, check to ensure you didn’t over-fund a 401(k).
The contribution limit for 401(k) and other workplace retirement plans is $22,500 for 2023. If you’re 50 or older, you can contribute up to $30,000 with an additional $7,500 in catch-up contributions. In 2024, contribution limits for employer-sponsored retirement plans will increase by $500 to $23,000 or $30,500 if you’re 50 or older.
Also, keep in mind, you can still contribute to an IRA for the 2023 tax year until April 15, 2024. The IRA contribution limit for 2023 is $6,500 (or $7,500, if you’re 50 or older, with a $1,000 catchup contribution.) In 2024, the limit jumps to $7,000, or $8,000 if you’re 50 or over. So there are plenty of opportunities to boost your savings!
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It’s the season of giving too!
To get a tax deduction for a charitable contribution, you must itemize your taxes. For 2023, the limit on charitable cash contributions is 60% of the taxpayer’s adjusted gross income.
Gifting appreciated stock or non-cash assets that you’ve held for more than a year may be another option. Giving this way may eliminate paying the capital gains tax you’d have to pay if you sold the asset and donated the proceeds.
If you’re age 70½ and older and have a traditional IRA, you can make a qualified charitable distribution of up to $100,000 in 2023 to a qualified charity.
Also, apply for a matching gift from your employer to your charity of choice, if offered, and look out for matching contributions to the organization from generous donors. Timing your giving to a matching campaign could more than double the amount of your donation – and make it a gift that truly keeps on giving!
I hope you enjoy a wonderful holiday season!
Sharon
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