Secure Act 2.0 - What you need to know.

As we go into the end of the year, it is important to know what changes lie ahead so that your plan is up to date and the appropriate adjustments can be made. Below you can click on the provision to bring you to the area in the Act that is referenced.

Starter 401(k) plansEmployers can offer a deferral-only "starter" 401(k) that automatically enrolls all eligible employees at a deferral rate of at least 3%, but no more than 15%. The deferral limit is the same as the IRA limit: $7,000 for 2024; $8,000 for those age 50 and older.  This is a simple way for small employers to set up a retirement plan for their employees that’s an alternative to state-mandated savings plans.
529 account beneficiaries can roll over money from a 529 into a Roth IRAThe beneficiary of a 529 plan can roll over money from a 529 into a Roth IRA account in their name. At the time of the distribution, the 529 must have been open for a minimum of 15 years, and the amount that’s rolled over to a Roth IRA must have been in the 529 account for at least five years. The rollover amount is limited to a lifetime total of $35,000 and is subject to the annual IRA limit ($7,000 for 2024; $8,000 for people 50 and older).1  This allows unused money in a 529 plan to be rolled over to a Roth IRA where withdrawals are tax-free. This creates a new way to benefit 529 account beneficiaries and helps reduce anxiety about unused money in a 529 account.
Retirement Plan Matching Contributions for Student-Loan RepaymentsEmployers can treat participant’s student-loan payments as an employee elective deferral for the purpose of a matching contribution to the retirement plan. These matching contributions must be made available to all participants eligible for a matching contribution. This benefits employees who may not be able to save for retirement because they’re focused on paying down student debt. This allows them to pay down their student debt without forfeiting retirement plan contributions. 
Penalty-free withdrawals for emergenciesEarly distributions from 401(k) plans aren’t subject to a 10% penalty if used for immediate financial needs due to personal or family emergency expenses. A distribution of up to $1,000 is permissible once per calendar year. The participant has the option to repay the distribution within 3 years, and additional emergency distributions aren’t permissible during this period unless repayment occurs.This gives participants penalty-free access to their money to help pay for unforeseen emergency expenses. 
Penalty-free withdrawals for victims of domestic abuseParticipants who self-certify that they experienced domestic abuse can withdraw the lesser of $10,000 (indexed for inflation) or 50% of the participant’s account. This distribution is not subject to the 10% penalty for early distributions. The participant has the opportunity to repay this withdrawn amount over 3 years, and they will be refunded any income taxes on the repaid money. This gives domestic-abuse survivors penalty-free access to their retirement account to help pay for expenses such as escaping an unsafe situation.
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram