The SECURE 2.0 Act continues to bring changes to America regarding retirement savings and planning and 2025 will usher in more updates.
While many things have already been implemented due to SECURE 2.0, 2025 will bring even more changes – and there will be more in the years to come as well.
So what do you need to know as a financial advisor or plan sponsor? Here are a few of the key things coming up in 2025.
Increased Catch-up Contribution Limits for those 60-63
SECURE 2.0 raised the maximum catch-up contribution for those ages 60-63 – making it the greater of $10,000 or 150% of the age 50 catch-up limit in effect for the year as adjusted for cost-of-living increases.
This change is aimed at getting those closest to retiring ready to retire financially.
For plan providers, however, it means they need to track participants by age to make sure the right limits are applied – sending out the correct correspondence. As of yet, it isn’t known if this is mandatory or optional – so stay tuned!
Mandatory auto-enrollment for new plans
SECURE 2.0 requires all new 401(k) and 403(b) plans adopted after December 29, 2022 to automatically enroll participants at 3%-10% and increase the rate by one percent per year to at least 10%, but no more than 15%. And employees must have 90 days to opt out. There are some exemptions, based on the size of the workplace and age of the company but this is mandatory – not optional.
Part-Time Worker Eligibility Expansion
Starting in 2025, part-time workers who work at least 500 hours for two years will be eligible to participate in 401(k) and 403(b) plans.
However, a company match isn’t mandatory.
These are just a few of the changes coming in 2025 under SECURE 2.0.
Do you still have questions about what is coming?
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If you have other questions about retirement plan loans, email us or call 937.308.0758.
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