SECURE Act 2.0: Big Changes for Retirement Plans The House of Representative recently Auto Enrollment in 401(k) Plans voted and overwhelmingly approved Employerswouldberequiredtoenroll Robert Canterbury a bill by a vote of 41 -5 that employeesatpercent. 3 Employees Senior Wealth/ significantly impacts the rules about could opt out or opt to enroll at a lesser Retirement Plan Advisor contributing and withdrawing from Ifnoactionistaken,the Affinity BST Advisors amount. rcanterbury@affinitybstadvisors.com retirement plans. salary deferral amount automatically increasesbypercent 1 eachyearuntil SECUREAct2.0-SettingEvery theemployeereachespercent. 01 This Higher Catch-Up CommunityUpforRetirement is designed to force more individuals so Contribution Limits EnhancementAct-whichaimsto save more for retirement. Startingink) (104 , 20 participants encourage Americans to save more for agesand 36 ,2 would 46 beallowed retirement,iswidelyexpectedAs to pass we all know pension plans are to make additional annual catch-up the Senate later this year. virtuallyextinct,SocialSecurity contributionsofuptoThis .0 , 1$ generally is only enough to fund a amountisoverandabove HERE’S A LOOK AT WHAT SECURE fractionofretirementexpensesand thestandardallowable most Americans do not save enough 2.0 MEANS FOR BUSINESSES AND pre-taxcontributionlimit, to cover the rest. This change will THEIR EMPLOYEES: whichiscurrently.0 5,91$ forceemployerstodeduct3percent The current catch-up annual Required Minimum Distribution from employee paychecks unless the limitisfor 0 5,6$ thoseage (RMD) Penalty Reduced employee opts out. and 05 older. Currently,thepenaltyispercent 05 ofwhatyoushouldhavetakenbut continued... didn’t.IfSECUREpasses, 0.2 that penaltywillbereducedtopercent, 52 potentiallypercent 01 ifcorrected inatimelymanner.Whilemost retirees take more than the minimum withdrawalamounteachyear,many forget or incorrectly calculate the minimum.Thatmistakecanbecostly under current rules.The proposed new rules are more lenient and would allow for corrective measures.
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S P R I N G | S U M M E R 2 0 2 2 Q U A R T E R LY P U B L I C AT I O N
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