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After a harrowing number of days (that felt like weeks) following the election, news eventually emerged that Joe Biden had officially won the presidential race. That could mean a lot of changes on the retirement front. Here are a few big ones you should be aware of.
1. Fewer retirement plan tax breaks for higher earners
Right now, higher earners are the most likely to benefit from the tax breaks associated with saving in an IRA or 401(k) plan. Those who contribute to a traditional retirement plan get to exempt a portion of their incomes from taxes. That tends to benefit higher earners more than low or moderate earners because a) higher earners are in a stronger position to max out a retirement plan, and b) higher earners pay the highest marginal tax rate on their earnings, and hence eke out the most savings when part of their income isn’t taxed.
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Joe Biden wants to replace the existing tax break for retirement plan contributions with a flat tax credit. That way, an earner in a higher tax bracket would get the same tax benefit as an earner in a lower tax bracket for the same contribution amount. …
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