If you think you heard rumblings about the so-called SECURE Act 2, well, you have.
However, in its early stages it is formally known as the Securing a Strong Retirement Act of 2020.
You can thank Ways and Means Chairman Richard Neal, D-Mass., and Ranking Member Kevin Brady, R-Texas for introducing the bipartisan SECURE Act 2.0 legislation at the end of October in an effort to help greater numbers of Americans successfully save for a secure retirement.
Basically, the bill builds on the original SECURE Act to enable more workers to start saving earlier by saving more for their futures.
What You Should Know
Granted, there could be minor changes along the way before the bill passes, but as 401KSpecialist.com’s John Sullivan points out, the key points are strong.
Here is just a handful to watch for:
1. Automatic enrollment in an employee’s company 401(k) plan, when a new plan is created.
2. Allow individuals to pay down student debt instead of contributing to a 401(k) plan and still receive an employer match in the retirement plan.
3. Allow individuals to save longer by increasing their required minimum distributions to begin at age 75.
4. Offer individuals 60 and older more flexibility to set aside savings as they approach retirement.
5. The catch-up limits would also rise for 50 and older to save an extra $1,000.
6. Increase (and modernize) the existing tax credit from $1,000 for low and middle-income individuals, to $1,500 for contributions to a retirement plan or IRA (the Saver’s Credit).
7. Allow more flexibility for making gifts to charity through an individual’s IRA.
8. Allow taxpayers to avoid harsh penalties for errors while managing an IRA that could lead to a loss of their retirement savings.
9. Make it easier to locate lost retirement accounts by creating a national online database of lost accounts.
10. Make it easier for military spouses who frequently change jobs to save for their retirement.
When passed, this legislation will be a great step toward encouraging America’s workers to save for retirement. Hefren-Tillotson advisors often point out that it is never too early or too late to start saving for retirement. The tools and vehicles are all there for the taking.
If you would like to talk about your financial situation, please contact us here at Hefren-Tillotson today. We would be glad to help.