At the very end of March, the House of Representatives passed a version of the bill known as Secure 2.0. The bill passed the House with overwhelming bipartisan support in a 414-5 vote. The House version still needs to pass in the Senate, where there are differing ideas on exactly what the bill should contain. There is strong support, so it is less of a question of if Secure 2.0 will become law than what exact version.
The Secure 2.0 bill in any version aims to help Americans save for retirement through a variety of mechanisms and changes in tax law. Here are some highlights of what the bill hopes to accomplish and how. We’ll also note differences between the House and Senate plans throughout.
Sign Up More Workers for Retirement Plans
One way the House version of the bill aims to help people save for retirement is to simply get them into a plan. The law would automatically enroll workers in 401(k), 403(b) and SIMPLE IRA retirement plans in their workplace; however, they can opt out. It’s been shown that most people simply won’t take action, meaning they won’t enroll if they have to proactively sign up – and similarly won’t opt out. The Senate version does not require auto enrollment, but it does give companies incentives to structure plans so that they auto enroll workers.
Auto enrollment in the House version starts at three percent contributions and increases yearly until participants are contributing 10 percent of their pay. Business with 10 or fewer employees are exempt.
Encourage Small Employers
Workplace retirement plans come with administrative, financial and legal burdens just to set up and offer the plan. This is before any type of employer contributions and is often a roadblock to small employers offering plans to their employees. To help encourage small employers, the bill offers a retirement plan start-up tax credit of 100 percent for the first three years to cover these costs.
Bigger Catch-Up Contributions
Right now, 401(k) plan catch-up contributions for workers 50 and older are capped at $6,500 for 401(k) plans. Both the House and Senate versions offer to increase these amounts, but in different ways.
The House version increases 401(k) catch-up contributions up to $10,000 for those 62, 63 or 64 starting in 2024. A more generous version is offered by the Senate, allowing the same $10,000 limit but to all who are 60 or older.
There is a “catch” to the catch-up, however. Under both versions, all catch-up contributions to 401(k) plans will be treated as Roth contributions; i.e., after tax contributions beginning in 2023. Currently, workers can make the contributions on either a pre-tax or post-tax (Roth) basis.
Push-Out Mandatory Required Distributions
The House version would extend the age for taking required minimum distributions (RMD) from retirements plans from 72 up to 75, incrementally over 3 years (73 in 2023, 74 in 2030 and 75 in 2033).
The Senate plan raises the age to 75 by 2032 and also waives RMDs entirely for those with less than $100,000 in aggregate retirement savings. It also reduces the penalty for not taking RMDs down to 25 percent (currently 50 percent).
Expand Employer Matching
The way the vast majority of retirement plans work is that employees contribute a portion of their salary and then the employer contributes a matching amount of 50 percent or 100 percent of what employee saves (up to a limit). The Secure 2.0 bill proposes to make student loan payments qualify as deferrals the same as plan contributions. This means that if you make student loan payments, your employer can now make a matching contribution to your retirement plan account even though you are not actually making any contributions into the plan itself. This is not a requirement, but an option for employers.
Create a Lost and Found for Retirement Plans
It’s common for workers to lose track of retirement plans from previous jobs when they move and change jobs. The bill would create a national lost and found to aid people in locating plans they may have inadvertently left behind or forgotten about.
Conclusion
In whatever form the final bill takes shape, it will give Americans more options to save for retirement and expand access to workplace plans.
10 Comments
Vklkbj · October 17, 2024 at 9:19 pm
where can i buy cleocin – order indomethacin 75mg generic indocin 50mg over the counter
Edktdk · October 18, 2024 at 2:02 am
order losartan 25mg generic – cozaar 25mg drug cephalexin us
Bylhtb · October 22, 2024 at 4:01 pm
buy eurax cream for sale – buy aczone without prescription buy aczone gel for sale
Foqcdb · October 23, 2024 at 12:20 pm
modafinil over the counter – provigil pill purchase meloset pills
Ghgxii · October 27, 2024 at 10:01 am
buy bupropion without a prescription – shuddha guggulu without prescription purchase shuddha guggulu sale
Rfngpx · October 29, 2024 at 2:13 pm
capecitabine 500mg oral – order capecitabine 500 mg generic danazol uk
Hplawr · November 1, 2024 at 4:10 am
order progesterone 200mg generic – order progesterone 100mg without prescription purchase clomiphene pill
Ukgrto · November 3, 2024 at 7:13 pm
order fosamax generic – brand medroxyprogesterone buy provera pill
Vvupjj · November 6, 2024 at 11:33 pm
buy norethindrone 5 mg online cheap – how to get yasmin without a prescription yasmin for sale online
Fdofhg · November 10, 2024 at 11:31 pm
estradiol cost – buy estrace for sale buy anastrozole generic