Congress Could Soon Pass New Retirement Rules

If lawmakers pass a major spending package this week, Americans could soon find it easier to accrue retirement savings, according to CNN.

Known as SECURE 2.0, the retirement savings provisions were pulled from a bill that passed in the House and bills that passed two Senate committees.

"Americans deserve dignified retirements after decades of hard work, and our bill is an important step forward," Senate Finance Committee Chair Ron Wyden, D-Ore., said. "We are making significant progress for millions of low- and middle-income workers, who are far less likely to have retirement savings."

These workers often have demanding, physical jobs, and depend solely on their Social Security income. For the first time, millions more workers would access resources for retirement and see federal retirement contributions year after year, even if they have no tax liability."

Here’s what to expect from seven of the federal omnibus spending bill’s provisions, according to a breakdown from the Senate Finance Committee.

1. Require automatic 401(k) enrollment

   Unlike the current optional system, most employers setting up new workplace retirement savings plans would be required to automatically enroll employees in the plan. Employees who don’t wish to participate would then need to opt out. Employers would be required to set a default contribution rate for the employee of between 3% and 10%, plus an automatic contribution escalation of 1% per year up to a maximum contribution rate of 10%-15%. The provision would take effect after Dec. 31, 2024.

2. Allow for employer contributions to student loan debt

   Paying down student loan debt makes it more difficult to save for retirement. SECURE 2.0 would allow employers to make matching contributions to an employee’s retirement savings plan based on their qualified student loan payments. The provision would take effect after Dec. 31, 2023.

3. Raise the age for required minimum withdrawals

   Under the SECURE 2.0 package, the age for required minimum withdrawals would increase from 72 to 73 beginning in 2023 and then would move up to 75 10 years later.

4. Help employees build and tap into emergency savings

   While drawing from a 401(k) before age 59 1/2 ordinarily requires that taxes are paid on that money as well as a 10% early-withdrawal penalty, employees could make a penalty-free withdrawal of up to $1,000 per year for emergencies under SECURE 2.0. The provision would take effect after Dec. 31, 2023.

5. Increase catch-up contribution limits for older employees

   Under the SECURE 2.0 retirement package, employees aged 60-63 would be allowed to contribute $10,000 or 50% more than the regular catch-up amount in 2025, whichever is greater, instead of the current $6,500. The provision would take effect after Dec. 31, 2024.

6. Enhance the Saver’s Credit

   The new package would also enhance the Saver’s Credit. Eligible filers (e.g. married couples earning $71,000 or less) could receive a matching contribution from the federal government worth up to 50% of their savings, not exceeding $1,000. The provision would go into effect after Dec. 31, 2026. .

7. Help part-time workers save for retirement

   SECURE 2.0 would reduce the time period that part-time workers must serve before they can participate in a workplace retirement plan from three years to two. The provision would take effect after Dec. 31, 2024. .

• How to Salvage Your 401(k) in 2023
• Working at 76: Inflation Forces Hard Choice for Older Adults