What is the bipartisan Secure Act 2.0?
April 7, 2022
Congress is currently working on a bipartisan effort to increase retirement security and benefits for Americans, called the Secure Act 2.0. The act would build on its 2019 predecessor, and has already passed the house. We spoke with Jay Spector, CFP and a partner at Barton Spector Wealth Strategies, for more.
In 2019 Congress passed the first Secure Act which made “monumental” changes to retirement planning, said Spector. This act will further enhance the first. This will include, required mandatory distributions for those 72 to 75, workplace retirement plans with automatic enrollment, catch up contributions for individual retirement accounts and 401-K accounts, and Spector says there are even more changes coming along.
Businesses with over 10 employees would be required to enroll their employees in a 401-K.
Spector says, “One of the new contributions is going to be the insistence in automatic enrollments. Everybody, after they meet certain enrollment criteria, would be automatically enrolled. So once they are eligible to participate in a companies retirement plan with a three percent contribution. Ultimately, that contribution level will increase on an annual basis until it gets to ten percent of that employees paycheck.”
They do not have any choice in the contribution level going up, but says there may be ways to opt out in the future.He says it will help ease the retirement burden if younger people can start saving now.
Catch up contributions are for people over the age of 50. They can add an additional thousand dollars into their individual retirement account or into their Roth IRA account. If it is an employed sponsored plan like a 401-K or a 403-B plan, you can do $6,500.
Individual accounts will go up by inflation, and that $6,500 could go up to $10,000 if you are 62-64 years of age.
People repaying their student loans could get their employers to match their payment into a 401-K account.