The SECURE Act, when rolled out in 2020, was some of the most significant retirement legislation in years, but the government is already discussing further changes. Let’s run through the list of proposals and find out how they might impact planning in the future.
(Click the featured times below to jump forward in the episode)
When the SECURE Act became law at the start of 2020, everyone in the financial world expected that to be a significant part of the planning conversation for the year. But that all changed with COVID turning the world upside down.
Now that legislation is back on our radar as the changes are being implemented and planning is adjusted, and now we have even more proposals to sort through. If you haven’t seen the possible changes or just aren’t clear on what they could mean for your planning, then this episode should serve you very well.
When you listen to the podcast, you’ll hear Nancy share her opinion on each of the proposal being considered, but let’s run through a list of the the most notable.
First is the age to take required minimum distributions. It had moved up from 70.5 to 72 with the SECURE Act, and now that age could increase even more. This can allow retirees to continue building their savings, but it was also change the way you approach these withdrawals.
The next things is employers could start auto-enrolling employees into a 401k account. As it currently stands, most people have to opt-in to the account before they can start saving but this could help encourage more saving.
After that we’ll talk about the possibility of catch-up contributions increasing by $1,000. This will let people that are about to reach retirement age add even more to their accounts and put them in a better position when they step away from work.
One of the most interesting proposals deals with student loans. When you think of the inability people with outstanding loans have to save for retirement, it’s clear that many people are falling behind. If this change happens, people that are making regular payments towards their student loans would still be able to get the matching contribution from their employer. This could be a tremendous help for young people so it will be interesting to see how it goes.
The last thing we’ll discuss on the show is the possible creation of a national database that will allow people to search for old 401k accounts they’ve forgotten about. We all have trouble keeping up with things we don’t use anymore so this could be a big help for people.
So none of these are law just yet but the changes could come as soon as they end of 2021. Make sure you’re having conversations with your advisor to position yourself accordingly.
Listen to the entire episode or click on the timestamps below to hop around to different topics.
[1:02] – Summer update
[2:55] – Background on the SECURE Act
[3:46] – RMD age increase even further
[6:17] – Auto-enroll into 401k
[8:00] – Catch-up contributions could increase
[10:11] – Matching contributions on student loan payments
[12:18] – National 401k database
The Full Picture:
“Typically if you’re auto-enrolled in this type of a program, 90% of people stay enrolled so that promotes savings.”
– Nikki Earley
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The host: Nikki Earley – Schedule A Time To Meet – Or Call: (513) 563 – 7526