There’s a potential game-changer being discussed when it comes to retirement savings. It’s called SECURE Act 2.0 (Setting Every Community Up for Retirement Enhancement Act), and it’s intended to help more Americans ensure they’ll have enough money during their retirement. The new measures of the SECURE Act 2.0 are designed to boost retirement savings, but some changes will be a bit difficult to put into place.
- Mandatory Enrollment for Defined Contribution Plans
Under SECURE Act 2.0, employers that offer defined-contribution plans such as 401(k)s would be required to enroll eligible new employees automatically. Those employees would be enrolled at a contribution rate of 3%, similar to how many 401(k) plans operate now. But the annual contribution level would automatically be increased by 1% each year, maxing out at 15% of employee pay unless employees choose a different contribution rate.
- New Catch-Up Contribution Limits for 401(k) Plans
Employer-sponsored 401(k) plans have annual contribution limits, with separate catch-up contribution limits allowed for savers aged 50 and older. For 2021, the regular contribution limit is $19,500, while the catch-up contribution limit is an additional $6,500. SECURE Act 2.0 would introduce another catch-up contribution limit just for people aged 62 to 64. The limit, which would take effect in 2023, would allow those savers to add another $10,000 in catch-up contributions to their 401(k)s each year. The Act would also make all catch-up contributions subject to Roth guidelines for tax purposes.
- Increased Age for RMDs
The SECURE Act already pushed required minimum distributions back to age 72. And the 2.0 version would push them back to age 73 in 2022, then age 74 in 2029. Also, starting with the year 2032, savers wouldn’t be required to take RMDs until age 75, offering a break to people who choose to delay retirement or want to draw down other retirement assets first.
Until it becomes law, you can still benefit from the provisions of the original SECURE Act, and if you haven’t started saving for retirement yet, now might be a good time to start. Call us today at (540) 720-5656 with any questions.
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Megan Jones joined the ILG Financial team in 2020 as marketing director. Megan and her husband live in Fredericksburg, VA with their German Short Haired Pointer, Gus. Megan is a graduate of Longwood University and holds a degree in communications. Megan is the oldest of Dave Lopez’s three children and not only enjoys working alongside her father, but also with her cousin, Chase, who joined the ILG Financial team in 2020 as an advisor. Megan is also a fully licensed Life, Health, and Annuity agent. When not at work, Megan enjoys sitting on the back porch with family and friends enjoying food and music.
Amy Anderson joined the ILG Financial team in 2023 as the client relations coordinator. Her responsibilities include scheduling of appointments, annual check-up notifications, and annuity and required minimum distribution assistance. She is a graduate of Harding University with a degree in Computer Information Systems. Amy and her husband have two children and she enjoys reading, crocheting, music and spending time with her family.
Terri Center joined the ILG Financial team in 2019 as client services manager. She handles client records, application processing, and gathering information to provide a professional and friendly experience with all of our clients. Terri is a graduate of Oakland University. She is married and has two children. She enjoys hiking, family time, and puzzle challenging video games. She also likes to share her creativity in her canvas paintings and sewing projects.
Jessica Carson joined the ILG Financial team in 2018 as an agent. Jessica and her husband have four children, two dogs, 3 barn cats, 5 chickens, and three parakeets. She indeed loves her children and pets! When not at work, Jessica enjoys playing the piano and cello as well as traveling and spending time outside with her family, hiking, fishing, and boating.
Chase Lopez joined the ILG Financial team in 2020 as an advisor. Chase is a 2016 James Madison University graduate with a degree in management. Chase has been trained under the tutelage of Dave Lopez, who is not only the founder and managing member of ILG Financial, but also is Chase’s uncle and godfather. He also enjoys working alongside his cousin, Megan, who is Dave’s daughter.