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As of January 1, 2021, the Simple IRA retirement plan has expanded to allow for Roth contributions. The change was made as part of the Setting Every Community Up for Retirement Enhancement Act (SECURE Act), which was signed into law on December 20, 2019. Previously, Simple IRA contributions could only be made on a pre-tax basis, meaning the contributions were deducted from the employee's paycheck before taxes were taken out. This allowed for an immediate reduction in taxable income and the contributions grew tax-deferred until withdrawn in retirement. Now, employees can also choose to make Roth contributions to their Simple IRA, which are made on an after-tax basis. This means that the contributions are made with money that has already been taxed, so there is no immediate tax benefit. However, the contributions and any earnings grow tax-free and withdrawals in retirement are also tax-free. The ability to make Roth contributions to a Simple IRA can be especially beneficial for individuals who expect to be in a higher tax bracket in retirement than they are currently. By paying taxes on the contributions now, they can avoid paying higher taxes on the withdrawals in retirement. Additionally, Roth contributions may be beneficial for younger workers who have many years before retirement. Since the contributions and earnings grow tax-free, the funds can potentially grow to a larger amount than if they were made on a pre-tax basis. Employers offering Simple IRA plans should notify their employees of the new Roth contribution option and update their plan documents accordingly. Employees can then decide whether to make contributions on a pre-tax or after-tax basis, or a combination of both. It is important to note that while individuals can now make Roth contributions to their Simple IRA, the overall contribution limit of $13,500 for individuals under age 50 and $16,500 for those age 50 and over remains the same for both pre-tax and Roth contributions combined. In summary, the expansion of the Simple IRA plan to allow for Roth contributions provides employees with more flexibility in their retirement savings options. It is important for employers to inform their employees of the new option and for individuals to consult with a financial advisor to determine the best contribution strategy for their specific circumstances. https://inflationprotection.org/the-simple-ira-is-now-open-to-accepting-roth-contributions/?feed_id=99506&_unique_id=646916bc0df85 #Inflation #Retirement #GoldIRA #Wealth #Investing #Accountant #cpa #ROTH #rothcontributions #RothIRA #simpleira #simpleirarothcontributions #VanguardIRA #Accountant #cpa #ROTH #rothcontributions #RothIRA #simpleira #simpleirarothcontributions
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