Opt Out vs. Opt In N


ot enough people are seriously saving for retirement — and plenty of folks never get around to even signing


up for their employer’s retirement plan, thus foregoing the match that many companies offer. To combat that, the SECURE Act includes a provision, kicking in in 2025, allowing an employer to automatically enroll its employees in a retirement plan. Specifically, it requires employers that start new 401(k)


and 403(b) plans to automatically enroll workers at a contribution rate of between 3% and 10%. There’s some freedom still built in, however, as


employees may opt out. Just know that if you’re switching jobs to a company with an existing 401(k) or 403(b), you would fall under this rule.


Starting Jan. 1, 2025, you’ll be able to kick in up to $10,000 as a catch-up contribution to your 401(k).


the unused funds to be converted — tax- and penalty-free — into the beneficiary’s Roth IRA. There are a number of restrictions,


though. One is that the 529 must be at least 15 years old. Also, you can only transfer up to the maximum annual Roth limits each year. (Those limits apply to the beneficiary, not the account holder.) Check with your tax adviser for details.


5


YOU MAY BE ABLE TO BOOST YOUR NEST EGG Are you 60 to 63 years old? Starting


24% for singles earning over


$100,525 ($201,050 for joint filers) 22% for singles earning over


$47,150 ($94,300 for joint filers) Standard deductions are now $14,600 for singles and $21,900 for married joint filers.


BONUS DISCOUNTS The bulk retailer Costco Next has a bonus online discount


Jan. 1, 2025, you’ll be able to kick in up to $10,000 as a catch-up contribution to your 401(k). If you’re between 50 and 60 and over 63, you can still make a catch-up contribution of $7,500 annually. The new tax break is designed


to let those closer to retirement contribute more to their nest eggs.


6


HIGH-EARNER CATCH-UP CONTRIBUTIONS MUST GO


INTO A ROTH 401(K) OR 403(B) This seems like a restriction, but it’s actually a benefit. It requires people


section, similar to Amazon Warehouse, that provides extra discount prices from third-party suppliers on dozens of retail categories. To get access, simply log onto Costconext.com and enter your name and Costco membership number. The site recently featured products from 25 third-party retailers, like Gorilla playsets, Mikasa dinner and dishware,


who earn more than $145,000 to put catch-up contributions into a Roth 401(k) or 403(b) instead of a regular 401(k) or 403(b). This means your catch-up contributions have to be made after taxes, not pretax. You’ll lose the extra tax deduction today but gain a better tax break later, since Roth investments and gains can grow tax-free forever — that is, you are only taxed on your initial investment.


7


PUT EMPLOYER MATCHES IN A ROTH ACCOUNT


You probably already know the benefit of getting employer matches to your 401(k), but now you have the option of putting those matching contributions into a Roth 401(k) instead. There are many benefits to


a Roth, but be aware that those employer contributions will be treated as taxable income to you now.


Dearfoams slippers, and more. You won’t find the products in Costco stores, and the list prices are supposed to be cheaper than supplier websites.


DINING INFLATION Dining out — including at


fast-food places — got very expensive when inflation was surging in 2021 and 2022. CNET reported that fast-food


prices were up 13% from 2021 to 2022, and the National Restaurant Association says prices climbed an additional 6% in 2022 at many top burger and chicken joints. The costs of labor, ingredients, logistics, and transportation are to blame. And while inflation is now moderating, the cost to eat at most fast-food restaurants hasn’t gone down.


FEBRUARY 2024 | NEWSMAX MAXLIFE 79


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