Asset managers wary of retirement-savings cap chatter

Cornelia Mascio
Ottobre 21, 2017

The plan would help pay for the GOP's massive tax overhaul, but could depress retirement savings. People who file taxes as single or head of household will be able to contribute the full $5,500 (or $6,500 if they're 50 or older) to a Roth IRA in 2018 if their modified adjusted gross income is less than $120,000, and the contribution amount will phase out completely if they earn more than $135,000 (up from $118,000 to $133,000 in 2017).

The Wall Street Journal's Anne Tergesen and Richard Rubin reported that GOP tax writers on the House Ways and Means Committee are considering a proposal that would cap the amount people are allowed to put into a traditional, tax-deferred 401 (k) account, or IRA.

[Question] How much will I be able to contribute to my 401 (k) and IRA in 2018?

In other words, the Trump administration is incentivizing Americans to save less and give the government more so that it can finance tax cuts that largely benefit the wealthiest Americans. It isn't clear whether that would also apply to IRAs. Currently, the limit is $18,000 a year in a 401 (k), and $24,000 for those 50 or older. Any contribution afterward would have to go toward a Roth account. When you're younger and working, you're likely going to be in a higher tax bracket than you are when you're pulling your money out for retirement and living, in part, on Social Security. Recapturing some of that cash would go a long way toward paying for the tax cuts of $1.5 trillion over 10 years that Republican are contemplating.

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