US President Joe Biden is expected to sign on a new spending package, Secure 2.0. This package will both enable Americans to more easily save for retirement and lower the costs of withdrawing retirement savings.
Highlighted below are some of the new provisions of Secure 2.0, as per the breakdown of the Senate Finance Committee:
- A provision set to go into effect after December 31, 2024, and requires employers to set a minimum default rate of 3% (maximum 10%) for each employee. In addition, employers will be required to set an automatic yearly contribution of 1% up to a maximum contribution rate of at least 10% and no more than 15%. The provision requires many employers who initiate a new workplace retirement savings plan to enroll their employees in Secure 2.0.
- Another provision set to go into effect after December 31, 2023 allows employers to match a contribution to the employee’s retirement plan based on the employee’s qualified student loan payments. This will enable the employee to save for retirement while simultaneously paying down student debt.
- A third provision, set to go into effect after December 31, 2024, shortens the service time for part-time workers who work at least 500 hours a year to join a workplace retirement plan. Currently, the required service time is three years, and under Secure 2.0, it will be two years; this will ease part-time workers’ ability to save.