Sunday, September 25, 2022

New bill tackles inflation by increasing annual limits on contributions to retirement accounts

A pair of GOP lawmakers want to fight inflation by allowing people to stash more money into their retirement savings and thereby reduce their penchant for spending.

Reps. David Schweikert of Arizona and Byron Donalds of Florida plan to introduce a bill that would increase the contribution limits for IRAs and workplace retirement plans.

“This bill plays a critical role in fighting historic inflation by reducing liquidity in the economy,” Mr. Schweikert said. “Allowing Americans to contribute more to their retirement accounts not only helps hardworking individuals add to their savings, but also serves as an alternative for funds that might be spent on inflated goods elsewhere.”

Mr. Donalds said the move would enhance financial planning measures ahead of a possible recession.

“By increasing the contribution limits for IRAs and other retirement plans, Americans everywhere will be able to better prepare themselves for the future,” Mr. Donalds said.

The proposal, which The Washington Times got an early peek at, would allow retirement contribution limits to be increased across the board by $4,000 for contributions made throughout 2022.

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The workplace limit would increase to $24,500 from the current $20,500 limit and Roth and traditional IRAs would go up to $10,000 from the current $6,000 maximum annual contribution.

The deadline for contributing the additional $4,000 to an IRA would be set for Dec. 31, but taxpayers could also continue making contributions of up to $6,000 by April 15, 2023.

The legislation has little chance of getting a vote in the Democrat-run House.

U.S. Inflation hit a high of 9.1% in June, the highest year-over-year increase since 1981. The economy also shrank for the second straight quarter from April to June, prompting fears about a potential recession.

Gross domestic product fell 0.9% at an annualized pace for that period, which followed a 1.6% decline in the first quarter.

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