President Barack Obama proposed in his fiscal 2013 budget to require employers who don't offer employees a 401(k) retirement plan to automatically enroll them in a direct-deposit individual retirement account. Employees could opt out, but unless they did, their employers would deduct money from every paycheck to feed the IRA.
Some very small employers would be exempt from this retirement planning rule, but if they chose to participate anyway, they would receive up to $250 each year they maintained the plan and employees participated.
While on the surface, this idea sounds pretty heavy-handed, it's true we all have a vested interest in getting as many people as possible to put money aside for their retirements. Otherwise, those of us who are saving diligently will end up paying for those who haven't saved. Plus, starting early is vital. As those of us who are already well on our way to old age know, the years pass quickly.
The administration's budget proposal also offered another IRA goody-- this one a perk for older savers. This proposal would eliminate required minimum distributions, or RMDs, for people who are at least 70 1/2 years old whose tax-deferred retirement-plan balances do not exceed $75,000.
According to the Treasury Department, anyone who has no more than a total of $75,000 in IRAs when they turn 70 1/2 would be exempt from RMDs for the rest of their lives, even if their accumulated balance went above $75,000.
On the other hand, if you have more than $75,000 in your IRA when you reach 70 1/2, you'll continue to have to take RMDs, even if your balance eventually dips below $75,000.
The proposal says these numbers will be adjusted for inflation, and there will be a partial exemption for those with between $75,000 and $85,000 in their accounts.
The proposal would apply to those turning 70 1/2 on or after Dec. 31, 2012. If you're already taking RMDs, you have to keep taking. Sorry.