Editor’s Note: This an update of a story that originally published on December 20, 2022.
There will soon be new retirement rules in place that will make it easier for Americans to accumulate retirement savings – and make it less costly to withdraw them – now that lawmakers have passed an omnibus spending package, which President Joe Biden is expected to sign next week.
Collectively the retirement savings provisions in that package are known as Secure 2.0.
“[Secure 2.0] will help increase savings, ensure greater access to workplace retirement plans, and provide more workers with an opportunity to receive a secure stream of income in retirement,” said Thasunda Brown Duckett, president and CEO of TIAA, one of the largest US retirement service providers.
Here’s a look at seven of the Secure 2.0 provisions, based on a breakdown from the Senate Finance Committee.
Most employers starting new workplace retirement savings plans will be required to automatically enroll employees in the plan. (It is currently optional for employers to do so.) It will then be up to employees to actively opt out if they don’t wish to participate.
This Secure 2.0 provision will require employers to set a default contribution rate of at least 3% but not more than 10% for the employee plus an automatic contribution escalation of 1% per year up to a maximum contribution rate of at least 10% but not more than 15%.
The provision will go into effect after December 31, 2024.
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