Tariffs Deportation Contributions - Tuesday 12/10 Morning Muse
Voters returned Donald Trump to office. Among his campaign promises was an “America First” approach which included deporting illegal aliens and assessing significant tariffs on goods from around the globe. And especially China. How much of these promises get implemented versus what falls to the realities of governance remains to be seen.
Inflation?
Our assessment of impact if these measures are fully implemented? Inflation. Reducing the number of available employees will increase labor costs, which will find their way through the supply chain to the products and services we buy. And tariffs on imported goods will increase the acquisition costs of goods which, once again, will find their way to the retail side as an increase in the cost of those imported goods. What will actually happen? We don’t know though we suspect it won’t be nearly as all-encompassing as the campaign rhetoric would have us believe.
COLA Increases
For Social Security benefits, the COLA for 2025 is 2.5% or $25 per $1000 of benefit. The Social Security wage base, meaning the wages against which the full Social Security tax is assessed, is increasing from $168,600 to $176,100. Those who have taken Social Security prior to their Full Retirement Age or FRA, may now earn up to $23,400 without a reduction in Social Security benefits.
The breakpoints for Medicare premium increases for Parts B and D, for married filing jointly, are $212,000, $266,000, $334,000, $400,000, $750,000, and more than $750,000. Meaning that as your Modified AGI moves through these breakpoints, your Medicare premiums will increase. The 2025 premium is based on 2023 income as there is a two-year look back.
Retirement Plan Contributions
The salary deferral limit for 401(k) plans is $23,500. With the age 50 bonus of $7500, those of us north of 50 can contribute or defer a total of $31,000. For those of you between ages 60 and 63, the catch up limit is $11,500, allowing you to defer $35,000.
For SIMPLE IRAs? The deferral limit is either $16,500 or $17,600, depending on employee head count and plan elections. Catch up limit is $3500, or $5250 for those between ages 60 and 63.
For those of you making the maximum 401(k) deferral, the per-paycheck contribution for those 50 and over is $1291 for 24 pays and $1192 for 26 pays. Connect with your payroll team to make the adjustments. Or send us a note and we can help facilitate.
That’s it for now. Until we see you again, wishing you only the best.