Congress passes new retirement plan rules for 2023; see how it affects you
TIFTON, Ga. (WALB) - As part of the omnibus spending bill, President Biden signed into law the Secure 2.0 Act of 2022 which consist of significant changes to Americans’ retirement plans.
Experts recommend you first reach out to your employer or a financial professional about your personal retirement plans to get clear guidance through the different moving pieces.
According to Aaron Taylor, financial advisor of Bush Wealth Management, Secure 2.0 provides a saving enhancement for retirement planning and allows for increased Roth IRA contributions. Things like student loan contribution matching, mandatory auto-enrollment and increase catch-up contributions all fall under the new law.
Taylor says under the Secure 2.0 Act, one of the major changes is in reference to the required minimum distribution. The required age went from age 72 to 75. This means individuals with an account balance of $100,000, or less in aggregate retirement savings would have the required minimum distribution waived.
“So that gives you a little bit more time to grow those assets before you must start taking those out and paying taxes on them,” Taylor said.
The new law also created a tax credit that encourages small businesses to offer a retirement savings plan. According to the IRS There is a tax credit that can help cover 100% of the cost for small employers to implement a startup 401k plan for the first three years of the plan.
Experts say on average, most Americans are saving 8.5% of their income towards retirement when it should be around 10-15%.
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