Money Matters: Secure Act 2.0
COLUMBIA, S.C. (WIS) -Some are saying that Secure Act 2.0 could pass later this year.
What is this Secure Act?
The Secure Act 2.0 is a continuation of the 1.0 which passed about two years ago. It passed without a lot of attention because COVID was just starting to hit hard.
It did things like extend out required minimum distribution ages, allowed older individuals to contribute to IRAs and restrictions on how beneficiaries receive death payouts on qualified accounts.
Secure 2.0 takes it a step further.
What are the major changes if this passes?
There are a lot of improvements. These include increased contribution limits for catch up provisions. Another improvement is auto enrollment when you sign up for a new job. Most of our bad decisions are that we don’t sign up and we forget about contributing to retirement accounts.
Also, it offers things like annuities options to provide guaranteed income in retirement and incentives for small businesses to offer more plans for more employees.
Are there any downsides?
The main downsides for 2.0 are similar to 1.0. Required minimum ages could get pushed out further. It sounds good in theory because you don’t have to take out money until later in life. However what that’s doing is building up a tax liability into future years when tax rates will be going up, so we’d want to be prepared for that.
As with any provision it is just a provision and not a law. We encourage people to not get scared about what could happen and focus on what the law of the land is now and plan for those.
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