Building off the original Secure Act of 2019, Secure 2.0 makes important changes to retirement savings.
The package was passed in the last Congress as part of the $1.7-trillion omnibus spending deal.
Among many things, Secure 2.0 requires employers to enroll employees in a 401(k) by 2025.
“We’re all aware that people are saving less and less money today,” said Bill Bloss with RLB Accountants in Allentown.
He hopes it helps more people save for retirement and points out there’s tax deductions in the bill to cover the cost for companies with up to 50 employees.
“With this act, if you incurred up to $5,000 of expenses setting up that plan, the IRS will say OK will give you a $5,000 tax credit and reimburse you to cover those costs,” Bloss said.
Employers can also now use student loan payments as a match into a retirement plan. A study from M.I.T found 84% of adults say student loans affect their retirement savings.
“It’s treated almost as a deferral into a retirement plan and the employer then matches it,” Bloss said.
You can also now roll-over 529 college saving plans, up to $35,000.
“So if you have unused dollars left in those 529 accounts,” Bloss said, “you can transfer them into a Roth account.”
For those nearing retirement, the law also raises the required minimum distribution age to 73 starting in 2023, and 75 starting in 2033.
The limit for catch-up contributions has also increased.
There’s a new emergency expense distribution of up to $1,000, allowing you to take money out for an emergency.
Most of the provisions in the package will take effect either in 2024 or 2025.