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9 Ways SECURE 2 0 Will Change Retirement

hi my name is Jim and I was retired I'm back 
from a week down in Florida and I was able to   pack some sunshine in my overhead bags I 
brought it back for a Super Bowl weekend   go Eagles I've been reading a lot about 
secure 2.0 that huge retirement bill that   was included in the Omnibus Bill passed 
at the last moments of the last Congress   in this video I'm going to review nine ways secure 
2.0 will change your retirement and I'm going   to include three for people who are currently 
saving for retirement three for those approaching   retirement and three more for those like me 
who are in retirement stay tuned hey before I   begin will you please like And subscribe to this 
channel the more likes the more subscriptions the   higher this will be in the search results and I 
want to share some of the Lessons Learned in my   early retirement I'm now in year seven and I'm 
a DIY retiree I'm not selling a book or trying   to sell you a plan I'm just sharing advice so 
please like And subscribe thank you now let's   begin with three changes that affect those 
who are currently in the workforce saving for   retirement now these will phase in over time 
as the law goes into effect and as plans change   now beginning in 2025 employers must include 
an automatic enrollment for new employees in   their retirement savings plans those are the 
401ks or 403bs it used to be when I was young   you had to go and actively enroll 
in those plans when you are eligible   then they made it easier some plans to enroll and 
by 2025 plans must include this option this is the   exception for government plans to phase in after 
that but mostly more people will have an automatic   enrollment starting at three percent and working 
its way up to 10 percent now you can always   unelect and withdraw from the enrollment 
but starting out employees will have to   be automatically enrolled in the plans and that 
means more people will be saving for retirement   the second major change for current workers is 
there are many more Roth options now 401K is a   pre-tax dollars and you get a tax deduction if you 
meet certain thresholds Roth you pay taxes today   for the promise of tax-free interest and 
withdrawals later in life it's one of the best   inventions from a Delaware Senator ever look him 
up Roth Last good Senator Delaware probably had   so more Roth options are going in for 
current employees those employees of small   employers who are self-employed people 
will have simple and SCP Roth options   also more 401ks have Roth components and employees 
can elect either tax free Roth in the future by   paying taxes now or 401K pre-tax dollars it used 
to be that employer contributions the match up   to three percent in most cases would go into 
the pre-tax dollars and the new law will now   allow employers and employees to elect to have 
those contributions the match contributions from   the employer go into Roth accounts and that 
means more Roth dollars for your retirement   and it finally one change for those 
that are still paying off a student loan   employers will be allowed to match student 
loan repayments by recognizing those as   elective deferrals into their plans now again 
that's up to the employer and right now student   loan repayments are paused by the presidential 
uh executive order and a court challenge so it   may work out that in the future if you're paying 
back a student loan your employer will match it   into your retirement savings speaking of those 
student loans and college tuitions there's one   other change here in the new law and it relates 
to 529 funds the new law allows you to take those   excess 529 funds and transfer them with limits 
into a Roth IRA for the same beneficiary now the   529 must be in existence for at least 15 years 
contributions from the last five years are not   eligible and the conversions are actually subject 
to the Roth contribution limits so they're limited   each year and there's a maximum lifetime limit 
of thirty five thousand dollars but again it's a   little way of moving anything that's parked into a 
529 into your retirement Savings in a Roth account   now there's another change for current 
employees I want to caution you about   that I'm not going to highlight as one of the 
great ways this law is changing and that is   you'll be able to withdraw from your retirement 
plan without a 10 penalty for more reasons   it used to be that you had to keep it there 
until you were age 59 and a half and there were   a few exceptions but that was it if you withdrew 
earlier you got a 10 penalty and now there are   additional reasons for national natural disasters 
health concerns terminal illness domestic abuse   personal financial emergencies up to a certain 
level now you're allowed to withdraw all the   money without the 10 penalty for these cases but 
you'll still have to pay ordinary income taxes on   those amounts a much better approach is to build 
up an emergency fund of your own and don't touch   the retirement dollars for these emergencies 
now let's move on to three changes for those   that are approaching retirement and there are big 
changes for these workers number four in the nine   ways is catch up contributions for those age 
50 and above will now be indexed with inflation   beginning in 2024 they were always increased 
ever so sporadically by Congress and if you   look at a video that I made early in my channel I 
highlighted the contribution amounts because I've   always believed that adding to those contribution 
levels with catch-up contributions after your age   50 is very important pay down debt build up a cash 
cushion and max out retirement savings well now   that'll be easier to do because those contribution 
limits for catch-up will be indexed to inflation   now for instance a thousand dollar catch-up 
contribution is allowed on IRAs and that   dollar figure will go up over time in a 401k 
the catch-up contribution is 7 500 and again   that will go up over time so that's a big plus for 
those that are approaching retirement and want to   max out their retirement savings now beginning 
in 2025 there will be an additional layer of   catch-up contribution for those that are in ages 
60 through 63 don't ask me why those numbers in   that 64 65 and 66 too but for those people in that 
bracket they will be allowed to contribute with a   catch-up contribution of ten thousand dollars or 
150 percent of the age 50 catch-up limit as that   goes up with the index now there's a caution 
here and that's number six on the big changes   there's a requirement that the catch-up 
contributions must go into a Roth account if   your salary is more than 145 000 so you and your 
tax consultant will have to figure out when those   catch up contributions make sense and finally let 
me highlight three final reasons of the nine why   secure 2.0 will change your retirement and these 
apply to those of us who are currently retired   and number seven is that we will see later rmd 
ages now secure the original act in 2019 raised   the rmd age from 70 and a half to 72.

Well secure 
2.0 now raises it further based on how old you are   for those of us born in the 50s the rmd age 
will be 73. if you're born in 1960 or after   the rmd age will be 75. so that means 
there'll be more wiggle room for planning   Roth conversions and tax planning between 
retirement and those rmd dates the rmds   exist because it's Uncle Sam's way of making 
sure tax deferred dollars eventually get taxed   there's another little quirk in here about 
inheriting a retirement account from your spouse   it used to be that if you had inherited an IRA 
for instance from your spouse it was rolled into   yours and now with these different rmd ages they 
added a little wrinkle if the younger spouse dies   for instance and she had a r d age of 75 the 
older spouse could elect to instead of rolling   it into his Ira treat it as if the spouse were 
still alive and start taking rmds at the age the   spouse would have been 75.

It's a little Quirk and 
I don't know who stuck that in a bill but oh well   number eight on the changes is a lessening of 
the penalty for missing an rmd it used to be   if you forgot to make an rmd you were taxed at 50 
percent of that rmd level and it went to Uncle Sam   now that penalty that excise tax on 
a missed rmd will go to 25 percent   or 10 if you correct it in a timely manner there's 
still some regulations to specify what timely   means but overall that means less chance of a very 
expensive mistake with your rmds even a 10 penalty   is not worth it just plan to take your rmds if 
they're required finally number nine secure 2.0   eliminates rmds for Roth 401ks there was a 
quirk in the old tax code that an a Roth IRA   had no rmds but a Roth 401k did now most people is 
simply rolled over the Roth 401k into a Roth IRA   before that rmdh and that's what I was planning 
to do this law just makes that unnecessary I'll   probably go ahead and do it anyway to simplify my 
bookkeeping note that that change on Roth 401ks   will take place in 2024.

If you're due to 
take an rmd for a Roth 401k this year you   should probably roll it over before that rmd 
age so those are my nine ways that the secure   2.0 will change your retirement now there are 
a ton of other changes in fact my eyes were   going blurry trying to read all of these things 
in the last month I think it's called secure   because it's going to secure the jobs of 
financial planners tax accountants and IRS   agents for quite some time but I'll close with 
my standard warning I am not a financial planner   I'm just a DIY retiree so please take these as 
entertaining ideas from one educated consumer   to another always do your own due diligence and 
seek out a professional if you need one thanks

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