02.06.2024 By Amanda Woods

Secure 2.0 - Empowering Employees To Save For What Matters Most

The journey toward building financial security is a deeply personal one, with each of us bringing our own distinctive life experiences, cultural roots, socio-economic narratives, and emotional well-being. In the midst of our busy professional lives, where we invest considerable time, there's an undeniable desire to be embraced as our full selves. It's about more than just our professional duties – it's a desire to be seen holistically.

The journey toward building financial security is a deeply personal one, with each of us bringing our own distinctive life experiences, cultural roots, socio-economic narratives, and emotional well-being. In the midst of our busy professional lives, where we invest considerable time, there's an undeniable desire to be embraced as our full selves. It's about more than just our professional duties – it's a desire to be seen holistically. As we navigate our workplaces, It’s beyond beneficial to be encouraged to prioritize the things that matter most to us. This is important because, at the end of the day, we’re not just employees; we're unique individuals with our very own values, dreams, beliefs, and priorities.

We know that often in the workplace, we’re encouraged to save for retirement, which is undeniably an important priority for many. But often, because each of our unique financial landscapes is so different, our priorities don’t align with the savings options available and supported by our employer. But with the changes passed with the Secure 2.0 Act of 2022, there are some positive changes on the horizon for us as we navigate our financial lives in the workplace. 

Whether you’re prioritizing paying off student loan debt, making the most of our 529 plan, or building an emergency fund - read on to learn about how some of the provisions of the Secure 2.0 Act may help you save for what matters most in the workplace starting in 2024!

Getting The Most Out Of 529 Plans.

As we covered in our America Saves Guide to 529 Plans, planning ahead for your children’s or loved one’s education expenses is a great way to pave the way for a higher education experience that is within reach. But for some, there is an apprehension to pay into 529 plans for fear of paying a fee for any unused funds. We know that plans change, or perhaps a student qualifies for grants or scholarships that render their education savings less necessary. And in this instance, it can feel frustrating or unfair to have to pay a penalty for removing these funds for non-qualifying expenses.

But fear not! If you’d like to prioritize saving in a 529 plan or have unused funds that you’re not sure what to do with, we have some good news for you. Thanks to Section 126 of the Secure 2.0 Act, allows for a rollover of funds in a 529 plan to a Roth IRA without tax or penalty, under certain conditions. In order to enjoy this benefit, the 529 plan must be at least 15 years old, and it’s important to keep in mind that the funds you roll over will still be subject to Roth IRA contribution limits.

Repaying Student Loan Debt.

Navigating student loan repayment can be an overwhelming time for many. And for those who are repaying student loan debt, it can feel like an enormous barrier to saving for anything, let alone for retirement. And while it’s not uncommon to have multiple priorities in our financial lives, as well as these priorities shifting over time, it can be challenging to feel like you have to choose. As we said above, not everyone may feel like they’re in the right season or position to be saving for the future. And that’s okay! 

And if you’re someone who may be missing out on matched contributions from your employer, because you’re paying down your student loan debt instead of contributing to your 401k, there’s some good news coming your way! Starting in 2024, Section 110 of the Secure 2.0 Act allows your employer to make matching contributions into a 401(k or b) plan or a SIMPLE IRA plan because you’re making qualified payments on your student loan repayment. This means that you won’t have to miss out any longer on matching contributions toward your retirement, simply because you’re prioritizing student loan repayment.

Saving For The Unexpected.

Preparing for the unexpected is an important step in building financial security. When we’re prepared for what’s next - good or bad - we’ve got the peace of mind of knowing we’re supporting our financial present. But if you're prioritizing building emergency savings, this may feel at odds with your plans to save for the future - especially in the workplace. This is especially true because many workplaces place an emphasis on retirement savings for you, making it even more challenging to put money away for the unexpected. The Bipartisan Policy Institute highlights that because so many are unprepared to handle unexpected expenses, they find themselves dipping into their retirement savings.

But thanks to Section 127 of the Secure 2.0 Act, employers now have the ability to make it much easier for their employees to save for the present, and the future. This provision allows employers to offer employees the option to have an emergency account tied to their retirement account. Employees are able to withdraw up to four times a year without paying a penalty for the withdrawal, making these funds easier to access in the event of an unexpected expense. There is also the option to automatically enroll employees in this emergency account, making it even easier to get started saving for what’s next.

Saving for what matters most to you is the absolute best way to not only feel connected to your savings goals, but to honor where you are now, and where you want to be in the future. Thanks to the changes passed with the Secure 2.0 Act, you can now begin to feel empowered in your workplace to support each of your financial priorities now, and into the future.

 

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