The bill is meant to improve on the original SECURE Act from 2019 and could bring major changes for businesses and workers.
BEAUMONT, Texas — A new bill from Congress that passed in late December 2022 could benefit many across the U.S. concerning retirement plans and small businesses.
The SECURE Act 2.0 could strengthen investment plans such as 401ks and 529s. The bill is meant to improve on the original SECURE Act from 2019 and could bring major changes for businesses and workers.
The act is a part of a 4,000-page bill.
Jason Dickerson is a Southeast Texas financial advisor. He broke down the most important changes that could impact retirement plans across the country.
“If you’re an employer, take advantage of it,” Dickerson said. “If you’re an employee, take advantage of it. If you’re a retiree, you have looser rules as far as when you have to take your money out.”
Dickerson believes the new bill from Congress can be taken advantage of.
“On 401Ks, now they can have the employer match to go to the Roth instead of the pretax, which is a big deal,” Dickerson said. “Hadn’t been able to do that before. If you’ve got a 401K plan that has a Roth account in it and you want to retire, you don’t have to take required minimal distribution.”
There is also a lost for those how do now know what 401Ks, Roth IRAs, and 529s are.
“401k is an employer retirement plan, and what it does is it allows employees to contribute to their retirement,” Dickerson said. “And in most cases, the employer has to contribute in some sort of a match. A simple IRA is similar to a 401K. It’s just not quite as many bells and whistles.”
The bill is set to benefit many across the U.S.
The SECURE Act 2.0 also impacts small business owners who get an increased tax credit of up to $5,000. This could mean better 401K plans for employees.
Employers can now view an employee’s student loan payment and match that amount to the 401K plan, so they are not penalized.
“That’s free money that your employee has given to you, so put in whatever percentage you need to get their full match,” Dickerson said.
For parents with children who may decide to not go to college, money that could be sitting in a 529 can now be rolled into a Roth IRA. Those who work part-time will only have to wait two years instead of three to access 401K benefits.
Social security has changed the amount to a person’s taxable income limit. It was $145,000, now it’s $162,000. Those who make more than that amount will be taxed.
Dickerson believes that it is never a bad idea to sit down with a financial advisor.