LAS VEGAS (KLAS) — For many people beefing up their retirement savings is important, but for parents who had kids later on in life and are still helping them out that may not be a priority.
President Joe Biden signed the retirement savings provisions known as the Secure Act 2.0 into law shortly before New Year’s day.
Brad Zucker with SMA wealth management says these changes are intended to help people maximize retirement accounts.
The first major change raises the starting age for required minimum distributions.
“The required minimum distribution age now increases to 73 years and by the year, 2033 it will be 75 years old,” Kristine Permanent said. “This will help employees keep hands-off retirement accounts, to beef up savings and provide future income.”
An increase in catch-up contributions to a workplace retirement plan effective January 2023 people 50 and older can contribute $7500 each year.
Effective Jan. 2025 people 60-63 can add $10,000 more per year above the standard limit.
Another big change is the increase in catch-up contributions.
Effective now if you’re 50 and older you can set aside $7500 dollars a year for workplace retirement plans, instead of $6500.
And in 2025, if you’re 60 to 63, you’ll be able to add an extra $10,000 more per year, above the standard limit.
“Those parents that started having kids later in life are putting their retirement contributions on the back burner, and now you can beef them up, to be certain you are on track,” Brad Zucker with SMA Wealth management.
Zucker said in two years the new provisions will have employees automatically enrolled in savings plans.
In just one year’s time, employers will be able to make contributions to workplace savings plans on behalf of employees who are still repaying student loans.
“So for example, if you made a $200 payment, your employee can match that $200 into a 401k plan,” Zucker added.
If you have to withdraw money from a 401k you currently face a 10% penalty if you’re younger than 59 and a half.
But the new law now offers some penalty-free early withdrawal exceptions in cases of terminal illness and people who have been subject to domestic abuse.