The Ways and Means Committee released the first draft of a major tax bill this week. While it is mostly aimed at increasing taxes to pay for other social policies and government infrastructure initiatives, there are a number of provisions that would change retirement planning.
Let’s look at seven different ways the tax bill would change retirement.
(1) Limits on High Income Earner Contributions to IRAs: Sec. 138301
Today, individuals with earned income who are not active participants in a 401(k) or other qualified account, whose spouse is also not an active participant, can contribute to an IRA regardless of their income or other retirement savings. For 2021, an individual can contribute up to $6,000 ($7,000 if age 50 or older) to an IRA or Roth IRA.