BOISE, Idaho- — A recently signed 1.7 trillion dollars federal spending bill includes another round of changes to the U.S. retirement system. The spending bill has important changes to retirement saving plans, known as the Secure Act 2.0.
Washington is encouraging Americans to grow their retirement accounts with the new Secure Act 2.0; Americans are expected to increase savings towards retirement by 40.5 billion, the most saved in over a decade.
“So it’s particularly tough for people entering the workforce to save for retirement now with the cost of goods and getting into a house. It’s tough right now,” said Matt Rowley, Freedom Retirement Services.
Congressional lawmakers are making more than 90 different updates to the Secure Act of 2019. One of those changes is requiring employers to automatically enroll employees into a 401k plan at a rate of up to 10% of their paychecks, with workers deciding if they want to opt-out.
“It’s possible for employers to make a contribution matching that dollar amount into their retirement savings plan,” said Matt Rowley.
Under the new rules, you can also wait longer to start drawing on your retirement funds, moving the required minimum distribution or RMD age up to 73 starting this year and up to 75 in 2033.
By 2024 employers will have the option to match an employee’s student loan payments with contributions to their retirement plans, giving employees extra incentive to save while paying off loans.
And those people who are concerned need to save more as they approach retirement. A new catch-up provision allows those aged 63 to 65 to contribute $10,000 toward their retirement account.
“I think there are some upsides and some downsides, frankly speaking,” said Matt Rowley.
These are just some of the dozens of updates.