Navigating the Secure 2.0 Act

The Secure 2.0 Act introduces several updates aimed at enhancing how individuals can save for retirement. Here’s an overview of a few highlights included in the legislation and what these changes could mean for you:

Matching Contributions for Student Loan Payments

The Secure 2.0 Act allows employers to contribute to their employees’ retirement accounts based on the employee’s student loan payments. This provision can help employees build their retirement savings while paying off their education debts. If you are repaying student loans, check to see if your employer offers a match benefit. Section 110 permits an employer to make matching contributions under a 401(k) plan, 403(b) plan, governmental 457(b) plan, or SIMPLE IRA with respect to qualified student loan payments.

Emergency Savings Accounts

Employers can now offer emergency savings accounts alongside retirement plans. These accounts are accessible without penalties and are intended for immediate financial needs, preventing the need to withdraw from retirement savings prematurely. Contribution limits are set to safeguard these accounts to be used for short-term emergencies. Section 312 allows employees to self-certify that they have had an event that constitutes a hardship or unforeseeable emergency for purposes of taking a hardship or unforeseeable emergency withdrawal.

Incentives for Small Businesses

Enhanced tax credits are now available to small businesses that establish or maintain retirement plans. These incentives are designed to lower the barriers for small employers to offer retirement benefits to their workers. Section 121 permits an employer that does not sponsor a retirement plan to offer a starter 401(k) plan (or 403(b) plan) with simplified requirements and lower contribution limits.

Catch-Up Contribution Limits

For those nearing retirement, catch-up contribution limits have increased, allowing individuals aged 60 to 63 and older to save more. This change is helpful for maximizing retirement contributions near the end of your career. To read more about how to make the most of the Secure 2.0 Act benefits, check out the contribution limits along with 5 other helpful opportunities recommended by Ameriprise here.

At StackStoneWealth, we are prepared to assist our clients in understanding the implications of the Secure 2.0 Act. Our team provides tailored advice that considers your unique financial situation and retirement goals. To discuss how the Secure 2.0 Act might impact your journey, contact us at StackStoneWealth@ampf.com.