Secure 2.0 Act and Your 401(k) -- WARNING!

In today’s video, we are discussing the new Secure Act 2.0 and what it means to your 401(k).

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The Secure 2.0 expands a bill that was signed into law in late 2019 called the (SECURE) Act, which stands for Setting Every Community Up For Retirement Enhancement.

The House passed on March 29th, 2022, by a vote of 414 to 5, and the Senate is now taking up their version.

If passed, the Secure Act 2.0 would bring these critical changes to your 401(k), including:

Mandatory Auto-enrollment – require employers with a NEW defined contribution plan (think 401k, 403b) to auto enroll new employees at a 3% rate of their pay.

Mandatory Scaling in future years – Auto increase of employee contributions by 1% per year up to between 10 and 15% of their pay.

Auto enroll into the QDIA - (qualified default investment alternative) which is usually a Target Date fund, but this bill also mentions a Managed account.

Increase “catch-up” contributions for those between age 62 and 64 – Normal catchup contributions above 50 are currently $6500, but if you are 62-64 years old, your new catch-up limit is $10,000 starting in 2024.