Secure Act 2.0: Changes To Retirement Plans Are Coming Your Way
If you are a business owner or an employee, your retirement plans may have changed following Congress’s bipartisan $1.7 trillion spending bill, Secure Act 2.0. Inside the bill, which is headed to the President for signing, are provisions directed toward increasing retirement savings and access to 401(k) and other individual retirement accounts for low- and middle-income workers.
Some of the key retirement provisions of the legislation include:
- Starting in 2025, many businesses must enroll employees in 401(k) plans. Employees would contribute 3% of wages, with an increase of 1% annually until it reaches 10-15%.
- Employees earning less than $71,000 per year would be provided a 50% match, up to $2,000, in employee cash from the federal government for their retirement accounts.
- Allowing one penalty-free withdrawal, up to $1,000, for emergency expenses from one’s 401(k). If not repaid within the year, another withdrawal could not be made for 3 years.
- Option for employers to offer lower-paid employees a savings account capped at $2,500 linked to their long-term retirement plans.
- Part-time employees can now have a 401(k) plan if they work for their employer for two, rather than three, consecutive years with at least 500 hours of service annually.
- Increasing the mandatory age people must take money out of their 401(k) from 72 to 73. Beginning in 2033, the age would increase to 75.
- Employers can choose to make matching contributions to retirement accounts based on an employee’s student loan payments.
Secure Act 2.0 provides increased opportunities to save for retirement while creating changes for some employers. Make sure you’re prepared for those changes. Contact Weiss LLP for more information.