You’ve heard it before…it’s time to save for retirement. Choosing the right option isn’t always easy. For example, many small businesses don’t offer employer sponsored savings plans and if they do, the options are limited. Employer sponsored 401(k) and other savings plans typically require employees to contribute a minimum amount each pay period…and let’s face it, sometimes it’s just not the right plan at this point in our lives…either because we’re not a fan of the contribution amounts, we don’t have the cash on hand, we plan to change employers in the near future, or we just don’t know what the options are.
The Pursuit of Happiness
If this sounds like you, you’re not alone. Many Americans in the same position…wanting to save but are unsure of how to find the right plan. Did you know that “about half of American workers, and 75 percent of part-time workers, lack access to employer-sponsored retirement plans like 401(k)s?”
In 2014, President Obama provided a solution, “Let’s do more to help Americans save for retirement. Today, most workers don’t have a pension. A Social Security check often isn’t enough on its own. And while the stock market has doubled over the last five years, that doesn’t help folks who don’t have 401(k)s. That’s why … I will direct the Treasury to create a new way for working Americans to start their own retirement savings: myRA.”
The myRA is a government backed, no fee savings plan that allows you to begin saving for retirement while allowing you the freedom to choose the level of contribution and the option to take it with you, no matter where you go. It’s simple:
- Deposits are made via payroll deduction
- Initial, minimum contribution of $25 to open an account
- After enrollment, each pay period you can deposit a minimum of $5
- It’s mobile. Take this anywhere you go, regardless of employer
- This is a Roth account, so you can still withdraw contributions without a tax penalty
- Will never decrease in value
- Earns the same interest rate available to federal employees
- Available to those making $129K income individually, or 191K as a couple
This option essentially levels the playing field by allowing more Americans the same opportunities to save for retirement. So, no matter where you work…no matter how much you begin contributing, you now have the ability to make that choice.
It’s the freedom to choose how to be happy…in your job, in your home, and in retirement.
But wait…there’s more money to be saved!
Saver’s Tax Credit
Excited about the new myRA? Well, the saver’s tax credit is the icing on the cake…and can be worth as much as $1,000 for individuals and $2,000 for couples. “This credit is geared towards low and moderate income workers who are 401(k) or IRA eligible.” This is an actual tax credit that is more advantageous in that it provides you with the full dollar credit towards your tax liability…rather than a deduction.
Take a look at the eligibility requirements and let us know if you have questions:
Maximum Income Level to qualify for the Saver’s Credit in 2014:
- $30,000 for single filers and married individuals filing separately
- $45,000 for heads of household
- $60,000 for married couples filing jointly
*The income limits rise slightly in 2015, when you can qualify for the credit if your income is less than $30,500 if single, $45,750 if head of household, and $61,000 if married filing jointly.
The following individuals are not eligible for the Saver’s credit:
- Those under age 18.
- Full-time students (enrolled as full-time for 5 months and over in a calendar year).
- Those claimed as dependent on another person’s return.
- Those at income levels above the aforementioned limits.
Saving for retirement is a must and we’ve come a long way from the “stuffing cash under the mattress” option. RPA can help you find the right solutions with a variety of savings plans designed for you. Your choice matters. Let’s talk.
Based in the Washington, DC area and with 15 years of industry experience, Rachelle Falls provides client service solutions in the areas of HR, Social Media Marketing, and Brand Management. She is also the radio host of HRNOW on Blog Talk Radio. Rachelle holds a Bachelor’s degree in Business from West Virginia University and a Master’s of HR degree in Strategic Human Capital Management from Georgetown University. She’s an HR pro, blogger, and conference speaker.