Secure Act 2.0 | How It Affects You & Your Business

June 15, 2023 - 3 minutes read

Retirement saving has always been an essential aspect of a stable financial future. However, the process is not always straightforward, with most people finding themselves falling short of their savings goals. Not to mention, the absence of retirement benefits from a company they work for. However, with the introduction of the Secure 2.0 Act of 2022, retirement saving just got a lot more accessible. In this blog post, we’ll dive into the details of the Secure 2.0 Act of 2022, how it affects you, and your business.

About Secure 2.0 Act

The Secure 2.0 Act of 2022 builds upon the success of the SECURE Act introduced in 2019. The goal of the Act is to provide more substantial coverage and benefits to employees while promoting increased savings. To achieve this, the Act introduces several pathways to increase retirement savings:

  1. Increase auto-enrollment for employers offering retirement plans, which makes participation automatic for eligible employees. This approach will see the number of employees covered by retirement plans move up significantly.
  2. Introduces a new requirement that all retirement plan participants receive an annual lifetime retirement income advanced notice. The notice is designed to help participants estimate the potential lifetime income of their current account balance.
  3. Promotes the use of long-term care insurance by making it available in retirement plans. Long-term care insurance would be included in the 401(k) plan; this promotes better retirement savings by reducing the financial burden that comes with long-term care insurance outside retirement plans.
  4.  Updates the rules governing 401(k) to allow for more investment opportunities for individuals and retirement plans. This approach seeks to expand the investment capabilities of 401(k) plans by allowing diversification amongst private real estate and other alternative investments.
  5.  Eliminates the maximum age for traditional individual retirement account contributions. Previously, an individual was unable to contribute to a traditional IRA once they attained the age of 70.5. The Secure 2.0 Act of 2022 removes this limitation, allowing individuals to continue making contributions as long as they are still working.

The Secure 2.0 Act of 2022, builds on the success of the SECURE Act, seeks to provide more substantial savings to employees who were not previously covered. The Act will help promote the expansion of retirement savings through auto-enrollment, updating investment rules, and allowing long-term care insurance to be included in retirement plans. With the removal of the maximum age limit on traditional IRA contributions, retirement savings options just got more accessible. If you are a business owner, contact us to review the impact of these changes on your business.

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