On The Agenda:
SECURE Act 2.0, son of the SECURE Act, has come out and we’ll explain what has changed and how it could affect you.
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Episode Show Notes:
On this episode of How Money Works, Craig and Jennifer Moser explain the SECURE Act 2.0. It has a lot of bipartisan support, which is exciting. This probably will pass, either at the end of this year or 2022.
We know this topic can be confusing, so give us a call. We’ve put together 10 ways this SECURE Act could improve your retirement savings strategy and improve the amount you’ll have when you retire.
The required minimum age is being changed again
Before, it was 70.5 years old. If you were a worker and you were 70.5, you had to start taking required minimum distributions. The SECURE Act wanted to change it to 72, and the SERCURE Act 2.0 would gradually change it to 75.
This allows you to stretch it out longer and not have a taxable event and do more planning with Roth conversion strategies.
They’re thinking about reducing the penalty
Right now, if you screw up the RMD calculation, the government says you have to pay a 50% penalty on the amount you didn’t take out. The new SECURE Act would reduce that down to 25% and possibly 10% if you correct it quickly enough.
Employers can auto enroll you in 401k
In the future, employees will be auto enrolled in 401ks and it will be mandatory. It would be set at 3%. You can opt out and modify it.
Catch up contributions will be increased
The SECURE Act 2.0 would increase catch up contributions with another tier. Between 62-64, you can do another $10,000.
Listen to the full episode or use the timestamps below to jump to a certain section. Thanks for listening.
2:03 – Required minimum age
4:04 – Reducing the penalty
4:51 – Auto enroll
5:39 – Catch up contributions
6:44 – Matching funds on student loan payoffs
7:49 – Find 401ks more easily
8:52 – Increase utilization of Roths
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