Secure 2.0 Act brings changes to your retirement savings

The new Secure 2.0 Act passed by Congress means sweeping changes to your retirement savings, and creates ways to help you save for emergencies.

The $1.7 trillion federal spending bill passed before Christmas also includes 90 changes to retirement savings. They are aimed at helping you to be better prepared for retirement.

To encourage more people to save for retirement this will become automatic. Starting in 2025, employers must put 3% of an employee's paycheck into a 401(k) or 403(b) plan, increasing 1% a year to a max of 10%. Employees who don't want this can opt out.

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"That very first paycheck, if they haven't opted out, they’re going to have money withheld. It will be automatic saving that will happen," explained Robert Gilliland, managing director and senior wealth advisor with Concenture Wealth Management.

Employers can also offer accounts that act as either retirement savings or emergency funds of up to $2,500 per year. The employer can match the employee's contributions to the account.

"A 401k emergency account. It’s going to give people who earn less than $150,000 a year, it’s going to give them the ability to put away up to $2,500 a year into an emergency savings account," said Gilliland.

Paying down student loan debt can also make it hard to save for retirement. That's why, starting in 2024, employers can match your student loan payments with contributions to your retirement account.

"If they’re paying down their student loans, it will give the employer the ability to put money away into a retirement account for them," Gilliland said.


And people not using funds in their 529 college savings plans can roll up to $35,000 over their lifetime into a Roth IRA.

"That's huge. If the student gets a scholarship or doesn’t use all of their 529 money," said Gilliland. "They’re going to be able to roll a portion of it into a Roth IRA."

Also starting in 2025, people from ages 60 to 63 can make catch-up contributions to their workplace retirement plans of up to $10,000 a year.

The age when Required Minimum Distributions begin is going up from 72 to 73.