Editor’s Note: This an update of a story that originally published on December 8, 2022.
New York
CNN Business
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There soon may be new retirement rules in place that could make it easier for Americans to accumulate retirement savings — and make it less costly to withdraw them — if lawmakers pass a major spending package this week.
The retirement savings provisions – known as Secure 2.0 – were drawn from a House-passed bill and bills that were passed by two Senate committees.
“[SECURE 2.0] will help increase savings, ensure greater access to workplace retirement plans, and provide more workers with an opportunity to receive a secure stream of income in retirement,” said Thasunda Brown Duckett, president and CEO of TIAA, one of the largest US retirement service providers.
Here’s a look at seven of the provisions in the package, known on Capitol Hill as an omnibus, based on a breakdown from the Senate Finance Committee.
Most employers starting new workplace retirement savings plans could be required to automatically enroll employees in the plan. (It is currently optional for employers to do so.) It would then be up to the employee to actively opt out if they don’t wish to participate.
The Secure 2.0 provision would require employers set a default contribution rate of at least 3% but not more than 10% for the employee plus an automatic contribution escalation of 1% per year up to a maximum contribution rate of at least 10% but not more than 15%.
The provision would go into effect after December 31, 2024.
When you have to pay down student loan debt, it makes it harder to save for retirement. Secure 2.0 would let employers make a matching contribution to an employee’s retirement plan based on their qualified student loan payments. That way, it would ensure that the employee is building retirement savings no matter what.
The provision would take effect after December 31, 2023.
It used to be that when you turned 70-1/2 you had to start withdrawing a required minimum amount from your 401(k) or IRA every year. Then, the age moved up to 72. Under the Secure 2.0 package, it would move up to 73 starting in 2023 and then to 75 a decade later.
Normally if you tap your 401(k) before age 59-1/2, you must not only pay taxes on…
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