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Huge Changes To Your 401k With Secure Act 2.0
Retirement planning is a crucial aspect of long-term financial security, and for many Americans, their 401k accounts play a significant role in this process. The Secure Act, which was introduced in 2019, brought important changes to retirement plans. Now, the anticipated Secure Act 2.0 aims to further revolutionize retirement savings, providing more flexibility and options for account holders.
The Secure Act 2.0 carries numerous provisions that have the potential to impact how individuals save, invest, and withdraw funds from their 401k accounts. Some of the major changes proposed in this legislation are as follows:
1. Automatic Enrollment: One of the key proposals of Secure Act 2.0 is to make automatic enrollment more accessible. Currently, employers can automatically enroll employees in 401k plans, but it is not mandatory. With the new act, employers with more than 10 employees will be obligated to offer an auto-enrollment feature, allowing individuals to start saving for retirement without needing to opt-in actively.
2. Increase in Contribution Limits: The Secure Act 2.0 aims to raise the contribution limits for 401k plans. As of 2021, the maximum contribution limit is $19,500 for individuals under 50 years old, and $26,000 for those aged 50 and above. The proposed changes would increase these limits, allowing individuals to save more for their retirement.
3. Catch-Up Contributions: Individuals aged 60 and above would benefit from Secure Act 2.0 as it proposes to increase the catch-up contribution limits. Currently, individuals in this age group can contribute an additional $6,500 to their 401k plans, but the new legislation suggests increasing this amount further.
4. Student Loan Payments and Retirement Contributions: One of the more exciting proposals is the inclusion of student loan payments within retirement plan contributions. As of now, employers can choose to match employee student loan payments in lieu of contributing to their 401k accounts. Secure Act 2.0 seeks to expand this provision, allowing employees to receive an employer match for their student loan payments while still contributing to their retirement plans.
5. Penalties for Failure to Provide Retirement Plans: The new legislation aims to impose penalties on employers who fail to offer retirement plans to their employees. Employers with more than 10 employees who fail to provide a retirement plan could face penalties of up to $10,000 per year.
6. Increase in Age for Required Minimum Distributions (RMDs): Currently, individuals are required to start taking RMDs from their retirement accounts at age 72. However, Secure Act 2.0 proposes to raise the age to 75, allowing individuals more time for their investments to grow tax-deferred.
Secure Act 2.0 introduces substantial changes that can positively impact retirement planning. The provisions mentioned above are just a few of the proposed amendments, with the full act expected to bring numerous additional modifications. It is important to note that legislative proposals can undergo changes during the approval process, so it is essential for account holders to stay updated with the latest information.
When evaluating the potential impact of Secure Act 2.0 on your retirement plan, it is advisable to consult with a financial advisor or retirement specialist. These professionals can help assess your individual circumstances and guide you in making informed decisions regarding your 401k account.
In conclusion, Secure Act 2.0 presents significant changes to 401k plans, offering increased flexibility, higher contribution limits, and additional benefits for account holders. If enacted, this legislation has the potential to contribute positively to individuals’ retirement savings and long-term financial security.
Pension and 401k for me. 28 years making widgets. Secure and retired at 55. I chose the job with a pension and stuck with it all the way. Done in 2025 and with retiree medical insurance. See ya!
All I hear in this video is an annoying old man who can't stop acting like a baby to relay actual information. Any chance you could just speak like a sane human because some of the message isn't terrible but your delivery is terrible.
Hey could you use softer paper in your next book…these pages hurt my ass.
CNN more fake news.
When finance guys talk environmental science, prepare for nonsense.
Congress has helped enough. I still haven’t recovered from the Biden election.
I once had a pension plan in the eighties but lost it when I changed jobs. My husband worked in the trades in a union and he actually got a pension at 55 when he retired. He then started a second career and got a 401K plan which was okay but he ended up with a lot more from the pension plan which is a check he gets every month since the age of 55 most of which we managed to save for his real retirement which is coming up in a few years. It did put us in a higher tax bracket though unfortunately.
That would actually be good if employers automatically enrolled workers into a 401k savings plan and did a small match on it so that people like my husband would stop getting a check back from his 401K at the end of the year bc most of the workers aren't participating and they are classifying him as a HIGHLY COMPENSATED EMPLOYEE because he participates in the plan and earned over $120K a year (from a few years ago, it's now about $150k a year) or some ridiculously low amount of money to be classified as a highly compensated employee by the IRS. Why is it his fault that he worked his butt off to make more than most of the employees in his company? The gov't loves to punish people who work hard.
Some of it is entitlement and some not. If you have a spouse that never worked, it is entitlement for her. If you have minor children when you are on SS, it is entitlement for them. If you worked 35 years, it is your money.
If it is on the mainstream news, it must have been thoroughly studied by the correct scientists so it must be true. Never mind the fact, these people are humans just like the rest of us.
Speaking of Secure Act 2.0, has Congress gotten around to fixing the drafting errors that forbid 401k catch-up contributions?
I don’t know why some people are so hard up for pensions. They’re regular income that makes your SS taxable, contributes to AGI for ACA, NIIT, and IRMAA, and is generally far less advantageous than Roth accounts.
Yahoo finance. Alexandra Semenova.
The latter choice I would even take the amount i and my employers paid into social security as a lump sum and handle it myself.
The government does not want us saving, every dollar we save is a dollar not propping up the economy
https://www.ssa.gov/history/stool.html
This had some info on the 3 legged stool that was interesting
According to this, the first reference to a 3 legged stool approach was from "Reinhard A. Hohaus, who was an actuary for the Metropolitan Life Insurance Company." So it was a sales pitch on selling annuities
Where is the money they are spending on the Illegal Migrants coming from? Obviously They didn't pay into it but govt is spending Billions I, there
Raise it to 7٪ And add .5% to help Medicare!
I am So grateful I have a Pension but it was Frozen 10 yr ago. It isn't enufc but sure will help!
The guys are " your side" are simply unaware or blind
Josh, do you know what year is projected to have more inflow to SSA than outflow? At some point boomers die off and Gen X is small generation compared to millennials and Gen Z.
I'm from the GOVERNMENT, and I'm here to "help".
Someone might be able to retire on SS now but not when I retire.