Snow flurries here in Tennessee off/on all day long. So far a whole lot less snow this winter compared to last. Next week it’s supposed to hit 70, but I think we have another snow in our near future.
I’m not trying to be your first source for retirement news, but this is worth highlighting in this blog…updates on recent law, known as Secure Act 2.0, went into effect in January 2023 and impacts current/future retirees with eligible retirement savings plans such as 401Ks:
- Most employers starting new workplace retirement savings plans will be required to automatically enroll employees in the plan (currently optional for employers to do so). It will be up to employees to actively choose to opt out if they don’t wish to participate. Effective at the end of 2024.
- Lets employers make a matching contribution to an employee’s retirement plan based on their qualified student loan payments.
- Will move back the Required Minimum Distribution (RMD) start age from 72 to 73 beginning in 2023, and then pushes it back to 75 in 2033.
- Will let employees make a penalty-free withdrawal of up to $1,000 a year for emergencies. Employees will still owe income tax on that withdrawal in the year it’s made, but they could get that tax refunded if the withdrawal is repaid within three years.
- For the retirement savings programs Catch Up clause, those aged 60-63 will be allowed to contribute $10,000 or 50% more than the regular catch-up amount in 2025, whichever is greater. Effective at the end of 2024.
- The Retirement Savings programs “Saver’s Credit” clause allows eligible filers- married couples making $71,000 or less- to get a matching contribution from the federal government worth up to 50% of their savings, but the match cannot exceed $1,000. Provision goes into effect after 2026.
- Part-time workers currently can participate in a workplace retirement plan if they have three years of service and work at least 500 hours a year. The new package reduces that service time to two years, effective after 2024.
Source for the above points, which includes further explanation of the changes, comes from CNN:
https://www.cnn.com/2022/12/20/success/retirement-savings-secure-2-0-omnibus/index.html
And for those of you collecting Social Security, you should have seen an 8.7% cost of living adjustment in your January payouts. Cheers!