Editor’s note: This is a revision of a History which was first published on December 8, 2022.


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CNN Business

New retirement rules could soon be in place that could make it easier for Americans to save for retirement — and make it easier to withdraw — if lawmakers pass a major spending package this week. .

The retirement savings measure – known as Secure 2.0 – was taken from a bill passed in the House and a bill passed by two Senate committees.

“[SECURE 2.0] will help increase savings, ensure greater access to workplace retirement plans, and give more workers access to secure retirement income , “said Thasunda Brown Duckett, president and CEO of TIAA, one of the largest providers of retirement services in the United States. .

Here’s a look at seven of the measures in the package, known on Capitol Hill as the omnibus, based on the Senate Finance Committee’s breakdown.

Most employers starting a new workplace retirement savings plan may be required to automatically enroll employees in the plan. (It is not currently mandatory for employers to do this.) It is up to the employee to opt out if they do not want to participate.

The Secure 2.0 requirement requires employers to set an employee contribution rate of at least 3% but no more than 10% for employees plus automatic contribution increases of 1% per year up to the rate the maximum participation is at least 10% but not more. more than 15%.

The provisions will apply after December 31, 2024.

When you have to pay off student loan debt, it’s harder to save for retirement. Secure 2.0 will allow employers to make matching contributions to an employee’s retirement plan based on qualifying student loan payments. This way, the employee is sure to build up a retirement savings regardless.

This provision is effective after December 31, 2023.

In the past, when you turned 70-1/2, you had to start withdrawing the minimum required amount from a 401(k) or IRA each year. Then, the age rose to 72. Under the Secure 2.0 package, this will rise to 73 from 2023 and then to 75 a decade later.

Generally, if you tap into your 401(k) before age 59-1/2, you only have to pay taxes on that amount, but you pay a 10% penalty for early withdrawals.

For workers who aren’t convinced to save money in a deferred retirement plan because they worry that it will be too difficult and expensive to access it in an emergency, Secure 2.0 may ease those fears. that is: it will allow employees to make layoffs without penalty. up to $1,000 per year for emergencies. Although the employee still has to pay tax on the withdrawal in the year it was made, they can get that tax back if they repatriate the withdrawal within three years.

If they do not pay the withdrawal, they must wait until the end of the three-year period before they are allowed to make an emergency withdrawal.

The provisions will apply after December 31, 2023.

Currently, if you are age 50 or older, you can contribute an additional $6,500 to your 401(k) in addition to the $20,500 annual federal limit that goes into effect this year.

Under the pension package, instead of $6,500, those aged 60, 61, 62 and 63 will be allowed to contribute $10,000, or 50% more than the standard retention amount in 2025, whichever is greater .

This provision is effective after December 31, 2024.

To help pay for the cost of the pension package, however, another provision that took effect a year earlier requires people with compensation over $145,000 to “Rothify” their contributions. Therefore, instead of making pre-tax contributions up to the earnings limit, you can still make the same contribution but you will be taxed in the same year. Your contributions will grow tax-free and may be withdrawn tax-free in retirement. But the federal government will receive the revenue from the first contribution.

There is an unused federal match for retirement contributions of low earners up to $2,000 per year. The new package will improve and simplify Saver’s Credit so that more people can use it. Qualifying filers (eg, couples making $71,000 or less) can receive a matching contribution from the federal government of up to 50% of their savings, but the match cannot exceed $1,000.

The provisions will apply after December 31, 2026.

Part-time employees must currently be allowed to participate in the employer’s pension plan if they have three years of service and work at least 500 hours a year. The new package will reduce that service time to two years.

The provisions will apply after December 31, 2024.



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