RETIREMENT SAVINGS LINKED TO STUDENT LOANS

RETIREMENT SAVINGS LINKED TO STUDENT LOANS

Retirement savings linked to student loans. Hidden inside the thousands of pages of text, which eventually come out after passage. The portion having to do with retirement savings, is a major change form the past. The new law links people's efforts to save for retirement with current needs, including the ability to pay off student loans and put money aside for emergencies. According to Tim Flacke, co-founder of the non-profit Commonwealth that worked with Congress and the private sector to come up with ideas for the proposal. The proposal included portions that allowed emergency savings, as a way to give lower income citizens help in the future to head off the crisis in the retirement savings of future Americans. Section 110 of the bill treats student loans as deferrals for the purpose of retirement savings. Retirement savings linked to student loans.

Starting in the tax year 2024, if a company chooses to provide this benefit, a worker could write a check for their monthly student loan bill, but in the process also earn a "match" for their 401(k), 403(b), or Simple IRA account. Those who argue for the benefit say it will help young people by allowing them to get compound interest if they start early in life. The large majority of college aged kids are not saving for retirement, as the student loan payments are eating up too much of their current income. The idea of allowing simultaneous student loan and retirement payments has actually been around Washington D.C. for many years and gradually gained support form both sides of the aisle. Sen. Ron Wyden of Oregon put the bill forward in 2019, with many Republicans getting on board as well.

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