Will the 401K be hit by the Republican tax plan? According to a number of sources, the Republicans are mulling limiting the pretax contribution to a 401K to $2,400 per year. Any additional employee contribution will be placed in a Roth account, which is post tax dollars and not taxed upon withdrawal at retirement. Any additional match by the employer, whether profit share or otherwise, will be allowed to be deposited in the 401K account. By taking this approach, the Republicans are looking to pay down the $1.5 trillion deficit the proposed tax plan will generate, leading to higher taxes and less retirement savings likely for employees. President Trump tweeted Monday that the 401k will not be touched as it is in its current state. The IRS is upping the maximum 401(k) contribution for 2018 by $500 to $18,500. Americans 50 or older will again be able to stash away an additional $6,000. Sources: The Wall Street Journal 10/23/17, USAToday 10/23/17
Will health care plans be taxable to employees? According to sources, the Republicans tax plan may require the value of employer provided healthcare plans to become taxable income to the employee although a deduction offsetting the income may be allowed. Under this scenario, employees will experience higher taxes since healthcare is pretax dollars, although when the employee files his/her tax return, they will get back the taxes paid. If so, that amount will be subject to social security and Medicare taxes, which it wasn’t before, thereby generating a 7.65% increase in taxes paid by employees.
Amazon has many suiters for the 2nd headquarters: Amazon.com Inc. said it received 238 proposals from cities and regions across North America to host its second headquarters, a sign of the intense competition to host the $5 billion project. The proposals came from 54 states, provinces, districts, and territories. Amazon, now based in Seattle, didn’t name any of the bidders or say when it would come up with a short list for its potential picks. Cities including New York, Boston, Atlanta, Nashville, and Austin have said they applied for the new corporate site, which is expected to generate 50,000 high-paying jobs over nearly 20 years. The proposals were due last week, and Amazon has said it would make a decision on the new location next year. Detroit also bid for headquarters in conjunction with Windsor. Source: The Wall Street Journal 10/23/17
California expands harassment training coverage: On October 15, California Governor Jerry Brown signed into law legislation that will expand the content of the mandatory sexual harassment training that employers with at least 50 employees must give to supervisory employees. As of January 1, 2018, the training must include harassment based on gender identity, gender expression, and sexual orientation. The legislation also adds another employer posting requirement in addition to the already mandated poster on discrimination in employment, which includes information about the illegality of sexual harassment and which must be displayed in a prominent and accessible location in the workplace. Employers will also be required to display a poster on transgender rights developed by the Department of Fair Employment and Housing. To obtain a copy of the poster, click here. Source: CCH 10/23/17
Do you review the track record of your 401k manager’s performance? Fidelity Investments, one of the world’s largest investment firms, has pushed out two high-level executives over the past few weeks amid sexual harassment complaints, according to two people familiar with the allegations. Fidelity is somewhat unusual in the financial world. It is led by a woman, Abigail P. Johnson, who has been chairman and chief executive since 2014. Johnson’s grandfather started the firm, and she owns a significant share of the privately-held company, according to Forbes, which estimates her net worth at more than $17 billion. Maybe it’s time for employers to require a code of conduct for its contractors and providers. The federal government has these requirements, why not private employers? Just a thought. Source: Washington Post 10/22/17
Retiring later, getting sicker earlier, and living shorter lives: The U.S. retirement age is rising. The government continues to push it higher, and workers are staying in careers longer. But lifespans aren’t necessarily extending to offer equal time on the beach. The U.S. age-adjusted mortality rate–a measure of the number of deaths per year–rose 1.2% from 2014 to 2015, according to the Society of Actuaries. That’s the first year-over-year increase since 2005 and only the second rise greater than 1% since 1980. At the same time that Americans’ life expectancy is stalling, millions of U.S. workers are waiting longer to call it quits. The age at which people can claim their full Social Security benefits is gradually moving up, from 65 for those retiring in 2002 to 67 in 2027. Almost one in three Americans age 65 to 69 is still working, along with almost one in five in their early 70s. Unfortunately, Americans in their late 50s already have more serious health problems than people at the same ages did 10 to 15 years ago, according to the journal, Health Affairs. Source: Bloomberg 10/23/17