rules for retirement accounts keep changing and evolving in this video i'm going to discuss five
significant changes that are likely going to be coming down the pipeline the house
ways and means committee recently approved a second bill a bill that would continue to tweak
the rules for contributing to and withdrawing from retirement savings accounts they're calling this
secure act 2.0 believe it or not it's already been about two years since the original secures
act passed and just like the first secures act secure act 2.0 really aims at further enhancing
people's ability and accessibility to access and contribute to retirement accounts the government
really wants to see greater participation from people like yourself saving for retirement and
they're just not seeing that so with this new secures act the version 2.0 i think you're
really going to see how they're trying to make that easier for you and trying to incentivize
you to participate to be clear i'm not saying you should or shouldn't that's up to you but
i think that's what they're after here as of this moment this is something that is expected to pass
in 2021 but if not this year then we're looking at 2022. knowing that this is likely going to pass
let's talk about some of the most significant ways this is going to affect retirement contributions
and retirement withdrawals in the future number one the proposed legislation would again raise
the age to begin taking rmds if you don't know what that is rmd is required minimum distribution
but this time they're looking at raising that rmd age to age 75. but this isn't something they're
looking at doing overnight this is something they're looking at doing over a 10-year time
horizon these rules would generally apply to traditional 401ks and ira accounts currently
the highest required minimum distribution age is currently 72 but this could change as early as
january 1st of 2022 and be raised to the age of 73 it's looking like it wouldn't actually bump
up to age 75 until january 1st of 2032. having that higher rmd age is going to give you more
tax planning options in retirement because you're going to have more control of when you want to pay
start paying taxes on those distributions many people have other forms of income already
and they're forced to take that rmd and it just cranks up their tax bill super high and it's not
good so i view having more control over when you want to take that money out as a good thing number
two the legislation would automatically enroll eligible workers into 401k or 403b plans with an
average savings rate of three percent of their salary this doesn't mean that your employer is
giving you three percent this means that three percent is coming out of your own check you can
opt out if you choose to if you want to save less but this would automatically enroll you to start
saving for retirement right away and once enrolled for enrolled workers the contribution rates would
automatically increase each year by one percent until the contribution of the employee's salary
reaches the level of 10 percent before we move on to number three let me know in the
comments how do you feel about being automatically enrolled in one of these retirement savings plans
for me personally if i'm coming fresh out of college with student loans
or i'm thinking about saving for a house i'm probably opting out but that's just me the third
change is going to allow workers to contribute even more to the retirement savings account in
particular those who are trying to make catch-up contributions ketchup contributions are generally
allowed for those who are age 50 and above or for those who are closer to the age of retirement to
contribute even larger dollar figures to their retirement savings plans the individuals who
meet this age criteria right now can actually contribute up to 6 500 above and beyond the max
contribution limits right now in 2021 the proposed legislation is looking to take this even further
so once you're age 62 to 64 instead of being able to do catch-up contributions of 6 500 or more
they're actually gonna raise that amount to ten thousand dollars under this proposed bill
furthermore the proposal also calls for ira catch-up limits for those who are 50 years old
to be indexed for inflation starting as early as 2023. this i'm totally in favor of there's a lot
of people who i know who are around the age of 50 or over 50 who really haven't put anything towards
retirement in any shape or form and let's be real here a lot of people probably don't feel like they
can save anything for retirement until later on in life anyways because maybe they've been strapped
with debt various forms of debt their whole life and maybe their income is finally enough where
they can do more than just get by so letting them put more weight in retirement later on
is definitely something i'm in favor of in fact i think they should be let people who are even
younger do this number four i find particularly interesting i've never heard of anything like this
you can earn employer matching funds on your student loan payoffs let me elaborate
you've probably experienced if you've spoken with one of your co-workers about saving for retirement
especially if they're fresh out of college they're in the midst of trying to decide should they save
for retirement or should they be paying off their student loans or this battle that's going
on inside their head of which one they should do what they're looking at doing here is allowing the
employer to make a matching contribution to the workers retirement account based on the worker's
own student loan payments this would apply to 401k plans for 3b plans simple iras and 457b plans i
almost think this is more so an incentive to get people to start to pay off their student loans
than it is to actually save for retirement but hey if you get a matching contribution for doing it
why not number five is what you should know is that currently the simple and set by arrays are
not allowed to accept roth contributions from employees but under the secure act 2.0 that
would change that and speaking of roth generally contributions or matches from coming from your
employer are usually set on a pre-tax basis well this would allow them to be on a roth basis if
you chose to do so now personally i consider those to be like probably the top five most significant
changes under secure act 2.0 but there's just a few other things i want to mention that they're
working on within this as well and i'll be sure to leave a link to the article i used to produce
this video in the comment section as well in the description section of the video so feel free to
check it out and read up on it further if you'd like to if you've ever lost touch with a former
employer don't know how to get a hold of them this next one that will really help you out as they're
going to make it easier for you to locate your former employers and vice versa where the employer
can locate former employees to match them with funds that are sitting in an old 401k account now
it varies from state to state but the average balance for these unclaimed 401k accounts is
anywhere from 500 to 2 000 however if the property is left unclaimed long enough eventually the state
is going to seize those assets and claim them for themselves if you have one of these accounts out
there somewhere from a foreign former employer contact them make sure you get a hold of those
funds and transfer that into an ira so that you can keep the money and not give it to the state
now if you're someone who works part-time and has had difficulty being eligible to participate
in one of these retirement plans they're going to cut back on some of the rules there in order
to allow you to participate a little sooner than you normally would if you're somebody
who has a 403 b plan you're generally limited to just mutual funds and annuities but this
is going to widen your investment selection to collective investment trust something to watch for
lastly this one is for employers okay employers listen up so the what they're looking at doing
is really they're going to try to incentivize you with this new build to grant your employees
more accessibility to these different retirement plans and how they're going to do that they're
going to be throwing tax credits your way several new tax credits are coming out of this bill
that you can utilize and claim to offset some of the costs to start these kind of retirement plans
at your organization those are the type of retirement changes coming down the pipeline
so stay tuned let's see if this passes i do think it will based upon what i've been seeing if you
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greatly appreciate it but most importantly engage in the comments i i really enjoy reading what you
have to say in your opinions and i want to know what do you think of the changes in the secure
act 2.0 do you like it do you dislike it let me know your thoughts all right well you know what
to do go have yourself a wonderful week and i will see you all in the next video live life uncaged
peace
you