Articles Tagged ‘401(K)’

Debt Commission and 401(k) plans Collide

Monday, January 31st, 2011

The National Commission on Fiscal Reform and Responsibility (http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/
documents/TheMomentofTruth12_1_2010.pdf) has released its final report
to reduce the deficit of the United States.

Reducing the deficit is critical, but the proposal to eliminate certain retirement tax deductions is a slippery slope. Eliminating tax incentives for retirement savings will certainly adversely affect participant’s ability to retire and put further long-term strain on our economy.

Our firm just released our “401(k) Retirement Readiness Study” that showed that across all age groups and salary levels, 401(k) participants indicate a low probability of success. In order to succeed, participants need to contribute more money to retirement plans, not less. Limiting the deduction will further reduce employees’ desire to make contributions to their retirement – furthering the primary cause 401(k) and related investment options aren’t projected to meet demand for retirement for employees in their 60’s.

With defined benefit plans continuing to scale back or be eliminated, we need to incentivize employees to be saving for retirement. If we don’t, the limited ability for participants to retire will force the government to make up the difference. This is not a scenario any consumer, taxpayer, or 401k participant desires.

Tom Totten, CEO
Nyhart
www.nyhart.com

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2011 Retirement Plan Limits Remain at the 2010 Level

Friday, December 31st, 2010

Increases in plan limits from year to year depend on the relationship of the cost of living index as of September 30 of the prior two years.  The cost of living index at September 30, 2010 was higher than the index at September 30, 2009, but lower than the index at September 30, 2008.  As a result, retirement plan limits for 2011 will be unchanged from the 2010 limits.

Limitation

2010

2011

401(k) / 403(b) / 457 Plan Maximum Elective Deferral

$16,500

$16,500

Qualified Plan Compensation Limit

$245,000

$245,000

Catch-Up Contribution Limit

$5,500

$5,500

Highly Compensation Employee Definition

$110,000

$110,000

Top Heavy Key Employee Definition

$160,000

$160,000

Defined Contribution Annual Additions Limit

$49,000

$49,000

Defined Benefit Annual Benefit Limit

$195,000

$195,000

Social Security Taxable Wage Base

$106,800

$106,800

  

Pat Scahill
Nyhart
www.nyhart.com

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NYHART STUDY REVEALS AVERAGE 401(K) PARTICIPANT CAN’T AFFORD TO RETIRE UNTIL AGE OF 73

Friday, December 3rd, 2010

STUDY REVEALS AVERAGE 401(K) PARTICIPANT CAN’T AFFORD TO RETIRE UNTIL AGE OF 73

December 1, 2010 (Indianapolis) – Nyhart (www.nyhart.com), one of the
nation’s largest independent actuarial and employee benefits consulting
firms, released their _Fall 2010 401(k) Retirement Readiness Study_ today as
part of the firm’s ongoing look at the effectiveness of the traditional
401(k) retirement benefit.

The 6-month study reviewed nearly 10,000 retirement accounts from employees
at 110 public and private companies. The study evaluated how contributions
to their 401(k), the primary retirement tool for most of these employees,
would affect the age at which they could retire.

Key results in Fall 2010 401(k) Retirement Readiness Study include:
* 81% of employees 18 or older will not be able to afford to retire by the
age of 65
* The leading cause impacting employees’ ability to retire on time is
their failure to contribute enough of their income towards retirement
* Employees above the age of 55 will need to contribute more than 45% of
pay through the remainder of their career to retire by age 65. Employees
age 45-55 must contribute 19% of pay to retire by 65.
* The average participant, relying on their 401(k) as a primary retirement
vehicle, will not be able to retire until the age of 73.
* Most employees age 60-64 will likely need to work until the age of 75 to
be able to afford to retire at their current levels of contribution to
their 401(k).
* 30% of employees age 24-and-under do not participate in a 401(k)
benefit.
* 7 in 10 employees age 24-and-under are not expected to retire by age
65.
read full article »

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