How SECURE 2.0 will affect your retirement?

President Biden recently signed the SECURE 2.0 legislation into effect. This bill contains sweeping changes for both the employer’s and the employee’s 401K plans.

Employer

Automatic Enrollment: You are now required to offer Automatic Enrollment of at least 3% as part of the plans starting 2025. Plans that are established going forward in 2023 will also have to switch to the automatic enrollment plan feature
Emergency Savings: Defined contribution retirement plans will be able to add an emergency savings account saving up to $2,500 per-employee on a Roth basis 💵
Matching Roth Contributions: You can now offer matching contribution to Roth accounts, which was previously unheard of. This is a huge game-changer!!
Student loan debt. Starting in 2024, employers will be able to “match” employee student loan payments with matching payments to a retirement account, giving workers an extra incentive to save while paying off educational loans.

Employee

Required Minimum Distribution: Age is now getting a bump from 72 to 73 starting January 1, 2023. Penalty for not taking a RMD will reduce from a whopping 50% to 25% 🌱 Additionally, Roth accounts are not subject to the RMD requirements starting 2024.
Catch-up Contributions: Starting 2025, individuals ages 60 through 63 years old will be able to make catch-up contributions up to $10,000 annually to a workplace plan, and that amount will be indexed to inflation (currently at $7,500 in 2023). For anyone making $145,000, all catch-up contribution will need to be made to a Roth account.
529 Plans. After 15 years, 529 plan assets can be rolled over to a Roth IRA for the beneficiary, subject to annual Roth contribution limits and an aggregate lifetime limit of $35,000. The rollover is treated as a contribution towards the annual Roth IRA contribution limit.

There is so much more to this bill.

Stay tuned to see how Feather incorporates all these to offer a low-cost, easy-setup and most technically advance 401(K)!

Reach out to us to see how we can help you in your retirement journey 🚀