Know two changes 401k 2017

Know two changes 401k 2017

The 401k 2017 retirement savings accounts will have two changes that could affect high-income workers, as well as those at the lower end of the salary scale. We tell you about them!

Limits expand

Although, according to MarketWatch, approximately 40% of Americans do not know how to prepare for retirement, the money they save would determine the comfort with which they will live the rest of their lives. For this reason, it is key that you know the changes in the 401 (k) accounts that will be applied in 2017.

1. Employers can contribute more money

By 2016, employers could contribute up to $ 53,000 to their workers’ 401k accounts. Although the contribution limits for employees did not increase, the employer limit is now: $ 54,000, reports The Motley Fool.

This change increases the maximum wage that companies can consider to provide counterpart contributions: from $ 265,000 to $ 270,000, which benefits high-income workers.

2. The income limits to request the Saver’s Credit will increase

Saver’s Credit, which pays between 10% and 50% up to $ 2,000 in contributions per person, gives low- and middle-income workers an additional incentive to participate in 401k 2017 plans. However, to be eligible for such credit, you have to be within certain gross income limits. These limits will be in 2017 as follows:

– Singles and married separately: $ 31 thousand (increased $ 250)

– Head of household: $ 46,500 (increased $ 375)

– Married filing jointly: $ 62 thousand (increased $ 500)

Other changes to take into account

According to the MarketWatch site, this year will also happen as follows:

• More employer-sponsored retirement plans will have automatic enrollment – when enrollment at 401 (k) is voluntary, only 42% opt for it!, Research from the Vanguard Group revealed. When the process is automatic, 91% retains the plan.

• Your retirement account will become increasingly digital: today the vast majority have a smartphone, this measure is logical. More companies will focus on the technology focus of retirement accounts, said Louis Harvey, president of financial services research firm Dalbar.