The SECURE 2.0 Act of 2022 (“SECURE Act 2.0”) is a sweeping piece of retirement legislation with complex new provisions. This week, we highlight a few of the SECURE Act 2.0’s key changes for employer-sponsored 401(k) plans.
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Emergency Savings Account
Beginning in 2024, employers can provide an emergency savings account, or ESA, for non-highly compensated employees. The ESA must be funded with Roth contributions.
Increased Involuntary Cashout Limits
The SECURE Act 2.0 also increases involuntary cashout limits from $5,000 to $7,000 starting in 2024. A former employee who maintains a balance in a qualified retirement plan can present complications for plan administrators. Thus, plans may “cash out” former participants without their consent.
Increased Catch-Up Contributions
Starting in 2025, individuals ages 60 through 63 years old will be able to make catch-up contributions of up to $10,000 annually, and that amount will be indexed to inflation.
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