It is estimated that 9 out of 10 non-Security workers want sources of income for their retirement, and therefore opt for financial mechanisms twhich allow them to obtain more money when they decide to retire from their active life.
In this regard, saving for retirement through a 401(k) plan is one of the many good alternatives available to individuals.
Many employers sponsor some type of tax-deferred retirement savingss plan for their employees. Tax-deferred means you don’t have to pay federal or state tax on your savings or the income you earn from investing it until you withdraw the money in retirement.
Automatic increase in contributions
Now the 401(k) plan has been changing for a while, for example, in terms of automatic increases in your contributions and catch-up amounts for those over 50.
In addition, it is being considered that companies could make 401(k) contributions on behalf of employees who are repaying student loans rather than contributing to their retirement plan.
Up to $20,500 can be invested in a traditional 401(k) this year, which is $1,000 more than in 2021.
Another important point is that those over 50 can contribute an additional $6,500 as a catch-up contribution, up to a total of $27,000, but employer contributions do not count against these limits.
Changes to Quarterly Statements
The IRS has established that for this year, the combined contribution limit for employers and employees is $61,000, and for participants age 50 or older, it is $67,500.
For simple 401(k) plans, which may be offered by small businesses, the contribution limit is $14,000.
On the other hand, your quarterly or annual statements you receive about your 401(k) plan will most likely contain illustrations showing an estimate of the lifetime guaranteed income you could earn if your account balance were annuitized.
One will show the monthly payments made until the death of the owner and the other will show the joint income with benefits for the surviving spouse.