Page 70 - BusinessWest February 20, 2023
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 “Overall, the SECURE Act
aimed to make retirement savings more accessible and secure for Americans of all ages and economic backgrounds.”
Expanded Eligibility for Long-term, Part-time Employees
Under current law, employees with at least 1,000 hours of ser- vice in a 12-month period or 500 service hours in a three-consec- utive-year period must be eligible to participate in the employer’s qualified retirement plan. SECURE 2.0 reduces that three-year rule to two years for plan years beginning after Dec. 31, 2024.
Increase in Catch-up Limits
Effective after tax year 2024, SECURE 2.0 provides a notable rise in the amount of contributions for those aged between 60 to 63. Generally, the additional catch-up limit for most plans is $10,000 and only $5,000 for SIMPLE plans. These amounts are subject to inflation adjustment just like the normal catch-up contributions. Fur- thermore, those more than 50 years old are eligible for increased contribution limits on their retirement plans (known as ‘catch-up contributions’). For 2023, the maximum catch-up contribution amount has been set to $7,500 for most retirement plans and will be subject to inflation adjustments.
Rothification of Catch-up Contributions for High Earners
For plans that permit catch-up contributions, high earners ($145,000 in paid wages from the employer sponsoring the plan the preceding year, indexed to inflation) can no longer enjoy the privi- lege of tax-deferred catch-up contributions, as their contributions need to be characterized as designated Roth contributions.
Treatment of Student-loan Payments for Matching Contributions
Starting in 2024, student-loan payments can be treated as part of your retirement contribution to qualify for employer-matched contributions in a workplace retirement account. Employers will have the flexibility to provide contributions to their retirement plan
for employees who are paying off student loans instead of saving for retirement.
Emergency Savings Accounts
Starting in 2024, retirement plans will have the option of pro- viding ‘emergency savings accounts’ that allow non-highly paid employees to make after-tax Roth contributions to a savings account within their own retirement plan. Employers may automatically
opt employees into these accounts at no more than 3% of eligible wages. Employees can opt out of participation. No further contri- butions can be made if the savings account has reached $2,500 (indexed), or a lesser limit established by the employer. The Depart- ment of Labor and/or the Treasury Department may issue guidance on these provisions.
Withdrawals for Certain Emergency Expenses
Penalty-free distributions are allowed for “unforeseeable or immediate financial needs relating to necessary personal or fam-
ily emergency expenses” up to $1,000. Only one distribution may be made every three years, or one per year if the distribution is repaid within three years. Penalty-free withdrawals are also allowed for small amounts for individuals who need the funds in cases of domestic abuse or terminal illness.
Federal Contribution Match
Starting in 2027, low-income employees can gain access to a federal matching contribution of up to $2,000 each year that will be deposited into their retirement savings account. The matching contribution is 50% of the contributions, but it decreases according to income — for example, married taxpayers filing jointly between $41,000 and $71,000, and single taxpayers between $20,500 and $35500.
  Retirement
Continued on page 73
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 Taxation
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