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The second Secure Act (H.R. 5954) has passed the House in an overwhelming bipartisan fashion. While it must go through the Senate and be signed by the president, some version of it will likely get passed. Here are some of the highlights:
Individuals closer to retirement would be able to save even more money towards retirement. Currently, those over age 50 can save an additional $1,000 into their IRA’s and Roth IRAs. Under the proposed Secure Act 2.0 those aged 62,62, and 64 would be able to make a catch-up provision of $10,000. This is a great option because many people at this age are in their peak earning years and their children are grown and they finally have some excess funds to set aside for retirement.
Currently, you must start taking money out of your retirement plans at age 72 (Secure Act 1.0 moved it from 70 1/2 to age 72). This new bill would extend it to age 72 in 2022, 74 in 2029, and 75 in 2032. This would be a boon for people who do not need their retirement savings to live on. It would also give them an additional window of time for planning and doing Roth Conversions as many people’s tax brackets drop in their early retirement years, only to skyrocket because of RMDs
Not all the provisions of the Secure Act 2.0 benefit older Americans. One provision would allow an employer to match the amount paid on student’s loans into the retirement plan. This would be wonderful for people who have significant student loans and not enough resources to save for retirement while they are paying down the loans.
This would require employers, including most small businesses, to automatically enroll eligible employees into the 401k plans at 3%. The employee could opt out or change the amount, but most employees have reported being happy that this step was done for them.
Of course, this still needs to be passed and signed into law. If you think these are promising ideas, please contact your United State Senators office and express support. They do track in bound calls of support (Or lack of support) so calling or writing does impact decisions. Below is a list of the Senators from the State most of our clients reside.
|Senator Dianne Feinstein||202-224-3841|
|Senator Alex Padilla||202-224-3553|
|Senator Debbie Stabenow||202-224-4822 (finance committee)|
|Senator Gary Peters||202-224-6221|
|Senator Mark Warner||202-224-2023|
|Senator Tim Kaine||202-224-4024|
|Senator Marco Rubio||202-224-3041|
|Senator Rick Scott||202-224-5274|
|Senator Chuck Schumer||202-224-6542|
|Senator Kirsten Gillibrand||202-224-4451|