Our Northeast Ohio Estate Planning Lawyer Explains How SECURE Act 2.0 Affects Your Retirement Plan
The Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0 represents a significant milestone in the ongoing effort to bolster retirement savings and financial security for American workers. Building upon the foundation laid by its predecessor, the original SECURE Act of 2019, this new iteration aims to address emerging challenges and further enhance retirement plans in the United States. SECURE Act 2.0 is designed to provide individuals with greater flexibility, expand access to retirement savings options, and ensure the sustainability of retirement plans in an ever-evolving economic landscape. Learn more in this post from our Northeast Ohio estate planning lawyer.
Objectives of SECURE Act 2.0
One of the primary objectives of SECURE Act 2.0 is to strengthen retirement savings programs by promoting greater participation among workers and increasing the effectiveness of existing retirement vehicles. By incentivizing employers to offer retirement plans and simplifying the process for small businesses to establish such programs, the legislation seeks to expand access to retirement savings opportunities for workers across various industries and income levels.
Updated Provisions of SECURE Act 2.0
SECURE Act 2.0 includes provisions aimed at enhancing retirement security for older Americans. This includes measures to encourage workers to continue saving for retirement beyond the traditional retirement age, as well as initiatives to address the financial challenges faced by retirees, such as rising health care costs and longevity risk.
Some updates to the Act include the following:
- An increase in the age for the Required Minimum Distribution (RMD). Currently, the age for the RMD distribution is 72, but the SECURE Act 2.0 increases this age to 75. This age increase would be phased in over a 10-year period so that by 2032, the age would be 75.
- The Act makes it mandatory (there is an opt-out provision) for employers to enroll their employees in a 401k retirement plan. This would require any employer with ten or more employees to enroll their workers in a 401k retirement plan and have the employee contribute a minimum of 3%. However, an employee could opt out of this automatic enrollment.
- There will be larger catch-up contributions for individuals aged 62 to 65. These individuals would be able to make catch-up contributions of up to $10,000
The primary overall goal of the SECURE Act 2.0 is to make it easier for individuals to save money for retirement. If you have questions about saving money for retirement, consult with our estate planning lawyer, who can answer your questions and help you understand what type of savings you may need for your future.