You may have heard in the news that the Secure Act 2.0 was passed right before New Year’s. As always, we try to be proactive and notify you of any changes that could impact your financial plan.

2023:
401(k)/403(b) updates
1. The max contribution limit has increased for 2023 and the “catch-up” for those of 50 means you can now save $30k/year
2. If your employer amends their plan to do this, you could request that their match – go into your Roth 401(k) as opposed to your traditional 401(k).
3. SEP IRA and SIMPLE IRA participants will now have a Roth option in their plans

2024:
1. Catch-up contributions for those over 50+ AND making over $145k will HAVE to go into a Roth 401(k).
2. There will be an emergency savings account within retirement plans. Essentially, you can access a small balance without incurring a 10% penalty.
3. Student loan payments can be treated as retirement contributions so that they can receive matching contributions from their employer.

2025:
1. There will be additional “catch-up opportunities” for ages 60-63
2. Employers will be forced to AUTO ENROLL new employees and certain part-time employees into their 401(k) plans (with a pre-set 3% contribution rate).

For more information and resources on the Secure Act 2.0, check out our blog:

Investment Advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Great Valley Advisor Group and Haas Financial Group are separate entities. This is not intended to be used as tax or legal advice. Please consult a tax or legal professional for specific information and advice.
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The Secure Act 2.0 was recently passed by the United States Congress and signed into law by President Biden. It is a piece of legislation that provides important updates to retirement savings and other financial benefits for young adults and those who are still working.

The Secure Act 2.0 is an update to the original Secure Act, which was passed in 2019. The original Secure Act made changes to the way that retirement savings are handled, including allowing people to start saving earlier, making it easier to save for retirement, and increasing the amount of money that can be saved.

The Secure Act 2.0 builds on these changes by making even more changes to how retirement savings are handled. The major changes include:

1. Allowing employers to offer annuities in their 401(k) plans. Annuities are a type of insurance product that can provide a steady stream of income in retirement.

2. Making it easier for small businesses to offer retirement plans to their employees. This includes providing tax credits to those who do so.

3. Increasing the amount of money that can be saved in an IRA or 401(k) plan. The maximum contribution limit for an IRA was increased from $6,000 to $10,000.

4. Allowing people to use their retirement savings to pay for certain expenses related to having a child or adopting a child.

5. Making it easier for part-time workers to save for retirement.

6. Allowing people to withdraw money from their retirement accounts without penalty if they are using the money to pay for certain types of expenses, such as medical bills and student loan payments.

The Secure Act 2.0 is a major step forward in providing financial security for young adults and those who are still working. It will make it easier for people to save for retirement and provide them with more options to do so. It will also make it easier for small businesses to offer retirement plans to their employees. This is a great way to ensure that everyone has access to the financial security that they need in retirement.