Retirement savings 2023: What are the rule changes for the Retirement that started from
End-of-year legislation means all retirement savers could find it much easier to save some money away during a rough start of 2023. There are some important changes that have been approved by Congress and the White House that you need to take into consideration. There are provisions included in the year-end $1.7 trillion spending bill that has many different aspects to this new law. However, there are three main financial areas that are addressed on this bill. These include the increase of retirement timeline flexibility, helping more workers save money, and catching up on saving.
These changes that were proposed earlier during a Congressional Session, were dubbed SECURE 2.0. The biggest aim is to expand upon the original Setting Every Community Up for Retirement Enhacement (SECURE) Act of 2019. This was a way to reform the retirement system and offer more Americans the necessary tools to save up more money. Let’s break down the three aspects of this bill that are directly linked to saving up money and preparing for retirement.
Increased retirement timeline flexibility
During the past two years, people who offer their assistance to a tax-referred retirement account that includes the 401(k) and traditional IRA needed to distribute their savings by age 72. The idea was that the government coupld recoup its share of the gains made while funds in these accounts grew without taxation. SECURE 2.0 will raise that age limit to 73, it already started on January 1, 2023. It will also increase to 75 in 2033, that’s the main goal.
SECURE 2.0 provisions will also need most of the employers to enroll new workers automatically in their retirement plan at a 3% annual contribution rate of their income, but not more than 10%. These workers can choose to opt out of their contributions if that’s what they want. This automatic enrollment provision doesn’t pertain to businesses with 10 or less employees or to start-up businesses open for fewer than three years. These retirement rules help people get their savings back on track.
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