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The SECURE Act 2.0, enacted in December 2022, introduces significant changes to retirement plans, with over **90 provisions** aimed at enhancing retirement savings and simplifying rules. Note the big changes in January 2025. Here are the key changes related to retirements:
## Major Changes in Retirement Rules
1. **Required Minimum Distributions (RMDs)**:
- The age for starting RMDs has been increased from **72 to 73** as of January 1, 2023, and will further rise to **75 in 2033**. This allows individuals to delay withdrawals from their retirement accounts longer, potentially increasing their savings growth[2][5].
2. **Catch-Up Contributions**:
- For those aged **60 to 63**, catch-up contributions will increase to **$10,000 annually** starting January 1, 2025, indexed for inflation. Additionally, beginning in **2026**, individuals earning over **$145,000** must make all catch-up contributions to Roth accounts[2][3][4].
3. **Emergency Withdrawals**:
- Starting in **2024**, individuals can withdraw up to **$1,000** from their retirement accounts for emergency expenses without incurring penalties. This is limited to one withdrawal every three years unless repaid[3][5].
4. **Automatic Enrollment**:
- New 401(k) and 403(b) plans will be required to automatically enroll eligible employees at a contribution rate of at least **3%** starting in **2025**, which aims to boost participation rates[1][5].
5. **Student Loan Repayment Matching**:
- Employers will be allowed to match employee student loan repayments as if they were retirement contributions starting January 2024, facilitating savings while managing debt[1][4].
6. **Roth Accounts and RMDs**:
- Roth accounts in employer-sponsored plans will no longer have RMDs starting in 2024, aligning them with traditional Roth IRAs[3][4].
7. **Hardship Withdrawals Alignment**:
- The hardship withdrawal rules for 403(b) plans will now align with those of 401(k) plans, allowing for greater flexibility in accessing funds during financial distress[4][5].
These changes reflect a broader effort by Congress to enhance the retirement landscape by encouraging savings and providing more flexibility for account holders.
Citations:
[1] https://www.tiaa.org/public/plansponsors/insights/tmrw/edition-1/secure-act-2-retirement-changes
[2] https://www.fidelity.com/learning-center/personal-finance/secure-act-2
[3] https://www.thetaxadviser.com/issues/2024/jan/secure-2-0-developments-and-guidance-for-2024.html
[4] https://www.thrivent.com/insights/retirement-planning/secure-act-2-0-provisions-7-changes-in-2024
[5] https://www.nerdwallet.com/article/investing/secure-act
[6] https://www.employeefiduciary.com/blog/secure-act-2.0-summary
[7] https://www.adp.com/spark/articles/2023/01/secure-20-act-of-2022-makes-sweeping-changes-to-retirement-savings-plans.aspx
[8] https://www.irs.gov/newsroom/secure-2-point-0-act-changes-affect-how-businesses-complete-forms-w-2
## Major Changes in Retirement Rules
1. **Required Minimum Distributions (RMDs)**:
- The age for starting RMDs has been increased from **72 to 73** as of January 1, 2023, and will further rise to **75 in 2033**. This allows individuals to delay withdrawals from their retirement accounts longer, potentially increasing their savings growth[2][5].
2. **Catch-Up Contributions**:
- For those aged **60 to 63**, catch-up contributions will increase to **$10,000 annually** starting January 1, 2025, indexed for inflation. Additionally, beginning in **2026**, individuals earning over **$145,000** must make all catch-up contributions to Roth accounts[2][3][4].
3. **Emergency Withdrawals**:
- Starting in **2024**, individuals can withdraw up to **$1,000** from their retirement accounts for emergency expenses without incurring penalties. This is limited to one withdrawal every three years unless repaid[3][5].
4. **Automatic Enrollment**:
- New 401(k) and 403(b) plans will be required to automatically enroll eligible employees at a contribution rate of at least **3%** starting in **2025**, which aims to boost participation rates[1][5].
5. **Student Loan Repayment Matching**:
- Employers will be allowed to match employee student loan repayments as if they were retirement contributions starting January 2024, facilitating savings while managing debt[1][4].
6. **Roth Accounts and RMDs**:
- Roth accounts in employer-sponsored plans will no longer have RMDs starting in 2024, aligning them with traditional Roth IRAs[3][4].
7. **Hardship Withdrawals Alignment**:
- The hardship withdrawal rules for 403(b) plans will now align with those of 401(k) plans, allowing for greater flexibility in accessing funds during financial distress[4][5].
These changes reflect a broader effort by Congress to enhance the retirement landscape by encouraging savings and providing more flexibility for account holders.
Citations:
[1] https://www.tiaa.org/public/plansponsors/insights/tmrw/edition-1/secure-act-2-retirement-changes
[2] https://www.fidelity.com/learning-center/personal-finance/secure-act-2
[3] https://www.thetaxadviser.com/issues/2024/jan/secure-2-0-developments-and-guidance-for-2024.html
[4] https://www.thrivent.com/insights/retirement-planning/secure-act-2-0-provisions-7-changes-in-2024
[5] https://www.nerdwallet.com/article/investing/secure-act
[6] https://www.employeefiduciary.com/blog/secure-act-2.0-summary
[7] https://www.adp.com/spark/articles/2023/01/secure-20-act-of-2022-makes-sweeping-changes-to-retirement-savings-plans.aspx
[8] https://www.irs.gov/newsroom/secure-2-point-0-act-changes-affect-how-businesses-complete-forms-w-2
SECURE 2.0 developments and guidance for 2024
Posted from thetaxadviser.com
Retirement
IRS
Posted 1 mo ago
Responses: 1
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