Our brief guide to SECURE 2.0 Act updates for 401(k), 403(b), Roth IRA, and 529 plans.
The SECURE 2.0 Act was enacted by Congress in December 2022 with more than 90 provisions, many of which are related to individual retirement accounts (IRAs) and employer-sponsored retirement plans.
Why are these changes happening now? Many in the financial industry believe that retirement savings in the United States have not been keeping pace with the rate of inflation or with other workers around the world. Many taxpayers are now working significantly longer than previous generations—as well as living longer. SECURE 2.0 is a foundational first step toward increasing opportunities and optimizing retirement savings, especially in Roth accounts.
Why should you care? No considerable change to retirement plan legislation (other than adjustments for inflation) has occurred since the concept of catch-up contributions was introduced over 20 years ago. The new catch-up provisions become effective in 2024 and could impact your retirement savings in many ways, with additional opportunities for putting away pre-tax or tax-deferred dollars.
Mandatory employer-plan amendments will now cover the following changes:
Overall, the SECURE 2.0 Act offers more flexibility and access to Roth IRAs, with provisions for annual inflation indexing. Proper planning can help reduce anxiety about retirement funding. If you’re an existing client who has questions about how these changes can impact your specific tax or retirement situation, reach out to your Wealth Advisor today.
If you aren’t already working with Mercer Advisors, let’s talk about our process and how a Wealth Advisor can work in tandem with a seasoned team of in-house financial professionals, including tax strategists and estate planning lawyers, to create your comprehensive wealth plan.
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