5 Proposals in Obama’s Budget for Retirement Savers
US News & World Report, February 2nd, 2010
President Obama’s budget for fiscal year 2011 includes many proposals aimed to help workers prepare for retirement. Here’s a look at the retirement projects the White House is asking Congress to fund.
Automatic IRAs.
Companies that don’t offer a retirement plan may soon be required to
enroll their employees in an IRA account. Under Obama’s current
proposal, 3 percent of employee pay would be direct-deposited into a
Roth IRA, the default savings vehicle. Workers may opt out, chose a traditional IRA,
or elect to save a different amount. Small firms with 10 or fewer
employees or companies that have been in business less than two years
would be exempt from participation.
Employers could claim a temporary tax credit upon automatically
signing their workers up for the IRA for $25 per enrolled employee up
to $250 for two years. Another tax credit would be available to small
businesses that begin their own retirement plan equal to 50 percent of
the start-up expenses for establishing or administering a new
retirement plan up to $1,000 per year for three years, an increase from
the $500 businesses are eligible for under current law. The proposal
would become effective in 2012.
A government 401(k) match. The Obama administration is proposing expanding the Saver’s Credit in 2011 to provide a 50 percent match on the first $500 of retirement savings
for individuals who earn less than $32,500 annually. Couples who take
home less than $65,000 could receive a match on their first $1,000 of
savings and the match would be gradually phased out for couples with
income between $65,000 and $85,000. The maximum credit would be $250
for a single filer and $500 for a married couple and be fully
refundable.
Read more of this article.Professional
Financial Advisers: Find out how these proposals will affect your retirement planning by contacting a professional financial adviser, or researching individual programs on NewRetirement.com