SECURE 2.0 Act of 2022 Explained by the Experts at Northwestern Mutual

The SECURE 2.0 Act was signed into law on December 29, 2022. The overall goal of the bipartisan legislation is to encourage more Americans to save for retirement while helping ensure those same Americans do not run out of money while in retirement. The major changes affecting retirement plans are summarized here.

This bill includes several changes but here are some key changes that might affect you.

For younger worker:

Automatic enrollment will be increased. This is with hopes that more people will save for retirement. With some exceptions for small businesses, the bill requires 401(k) and 403(b) plans to automatically enroll eligible participants, starting at a minimum 3 percent contribution and increasing annually to at least 10 percent but no more than 15 percent.

This also includes, withdrawals allowed for emergency expenses, and matching contributions extended to those paying student loans.

For older workers:

The required distribution age has been raised. Currently you must take required minimum, distribution (RMDs) from your retirement plan beginning at 72. But as of January 1, 2023, the bill will increase the required minimum age.

This also will include, catch-up contributions limit boosts, expanding Roth rules, penalty- free rollovers from 529 plans, plus more.

These are just a few of the changes we will start to see starting this year. Overall, the Secure 2.0 Act contains a lot of positive provisions to encourage taxpayers to save more. But there is some not-so-good news to consider as well.

Whenever there are significant legislative changes, it’s a good idea to consult with a tax professional — or consider working with a financial advisor who can help ensure you are taking advantage of all the opportunities available to enhance your personal financial plan.

Feel free to reach out to learn more on how this can affect you and your retirement at DBJ-WM@NM.COM and for the full article visit The SECURE Act 2.0 Summary: What You Need to Know for Your Retirement Planning | Northwestern Mutual to read more.