U.S. Sen. John Kennedy recently introduced the Keeping Your Retirement Act and the Increasing Retirement Amount Act to give Louisianians more control over their own retirement savings.
“Louisianians work hard every year to prepare to retire responsibly and enjoy the fruits of their labor,” Kennedy said. “They deserve to have more control over their own retirement plans, and that means limiting how much the government meddles here. I introduced these bills to give hardworking Louisianians the freedom to save more of their money on their own terms.”
The Keeping Your Retirement Act would raise the required minimum distributions age from 72 to 75 for certain retirement accounts.
Federal regulations may require individuals with traditional individual retirement accounts (IRA) and defined contribution accounts (such as 401(k), 403(b) and 457(b) accounts) to make annual withdrawals called required minimum distributions from their accounts. Currently, individuals who are at least 72 years old must make such withdrawals from their retirement accounts. These premature withdrawals can unnecessarily shrink people’s hard-earned savings.
Required minimum distributions also increase the taxable income of seniors who are still working, which may push some seniors into higher income brackets and potentially increase their tax liability.
By raising the age of mandatory withdrawals, the Keeping Your Retirement Act would give seniors more time for their retirement savings to grow before they are required to make annual withdrawals that can deplete their savings and increase their tax liability.
The Increasing Retirement Amount Act would allow individuals who do not have access to a workplace retirement plan to save more of their money for retirement by increasing their IRA contribution limit to $12,000 per year. The legislation would increase the IRA contribution limit to $15,000 per year for individuals who are at least 50 years old and who do not have a workplace retirement plan.
Currently, Americans cannot contribute more than $6,000 per year to their IRAs, whether or not their employers offer a retirement plan. Contributions to traditional IRAs are tax-deductible. In 2017, 50 percent of IRA owners who contributed to their traditional IRAs made the maximum contribution. As of March 2020, 29 percent of American workers did not have access to a retirement plan through their employers.