This article discusses upcoming changes to retirement plan rules in 2024, highlighting their impact on both employers and employees. It emphasizes the importance of understanding these changes to maximize savings and ensure compliance with new laws. The article also explores popular retirement plan options like 401(k)s and Roth 401(k)s, their benefits, and contribution limits.
Knowing changes to retirement planning rules will help employers save money, and comply with the law.As we near the end of 2024, it’s important for business owners to understand impending changes in retirement plan rules. Doing so may help both them and their employees save more money — and comply with new laws.Employers have many retirement plan choices, but the traditional 401(k) is the most popular.
Employee contributions to these accounts are pretax and employers can get a tax deduction for matching those contributions. Traditional 401(k) distributions are taxed and become required at the age of 72. Retirement plans are an excellent vehicle for reducing an employer’s tax bill while also providing workers with the ability to do exactly what they want with their money,” said Sonya Pappas, a partner at the law firm. When more employees participate in their company’s retirement plan, business owners and their highly compensated executives can make more contributions to their company plans without failing “discrimination tests.” Some of my clients have also realized the importance of encouraging employees to save, so they don’t end up in the awkward position of having an employee need additional financial help at retirement.Thanks to 2022′s SECURE 2.0 legislation, employers with plans established after Dec. 29, 2022, must now, as the default, set up employees to contribute to their company’s 401(k) plan, starting at 3% of their compensation and increasing 1% each year up to at least 10%. The total contribution limit from both the employee and their employer will increase to $23,500 to their company’s 401(k) in 2025, which is up from $23,000 in 2024. The Roth 401(k) contribution limits will increase to the same levels as traditional 401(k) limits. Many experts recommend that companies start and contribute to Roth 401(k) plans and their popularity has grown.. “Unlike individual Roth IRAs, which have income restrictions, Roth 401(k)s from a company are available to anyone whose employer offers the
RETIREMENT PLANS 401(K) ROTH 401(K) SECURE 2.0 TAX SAVINGS EMPLOYEE BENEFITS
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