While food and gas prices have become less expensive due to low inflation, Social Security beneficiaries will almost certainly not be getting an increase next year. The IRS will most likely decrease the amount employees can contribute to their 401k plans. In essence, the IRS cuts the 401k contribution limit. —
A public declaration about 2017 contribution limits for 401k plans in October is going to be undertaken by the IRS, according to USAtoday.com. This is centered on a formula which is attached to the inflation rate in the 3rd quarter as compared to the same quarter one year ago. For the year 2016, many workers can allocate up to $16,500 in contributions to their 401k plans. This includes an extra $5,500 if they are fifty years old or above. When IRS cuts 401k contribution limits, however, less contributions will be allowed.
Unless the rate of inflation gets better in the month of August and September, and the IRS cuts 401k contribution limit, the IRs may possibly be obligated to decrease the 401k cutoff in 2017 to sixteen thousand dollars. This is one analysis made by Mercer, a consultant for human resources. When the IRS cuts 401k contribution limit, the limit for additional contributions can possibly be reduced to $5,000. This would be the first time the IRS cuts 401k contribution limits.
A spokesperson Grace Harper stated in an email that the IRS is reviewing which laws are relevant. With certain inflation rates staggering, it is much too early to make preliminary speculations for the 2017 limits.
401k average figures fell to 27% in the year 2008, predicting that less workers can save may ignite an intense political backlash. This is because it is at this time that employees are fighting to mend devastating bear market losses. Unless a law amendment is put into place by Congress, the IRS may be left with no other option but to IRS cuts the 401k contributions limit. This is according to Andrew McDowell who is McMercer's senior consultant. According to him, "A strict interpretation of the code could lead them to believe that's their only option."
According to a forecast from trustees monitoring Social Security, lessening inflation rates also indicates that beneficiaries of Social Security will possibly not be able to obtain a cost of living adjustment in both 2017 and 2018. This would be the first time senior citizens have not received an increase in the cost of living allowances since Social Security adjustments were implemented in 1975. The Social Security Administration is due to announce next year's Social Security adjustments in October when the IRS cuts 401k contribution limit.
In essence, Social Security benefits cannot decline according to the law. Due to the expected increase in the premiums that need to be paid to the Medicare drug program next year, however, seniors will encounter a drop in payments as IRS cuts 401k contribution limit.
Name: Sihem Aissaoui
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Organization: Solo 401k LLC
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