What Are the New SECURE 2.0 Act Provisions?

February 09, 2024

In this episode, we delve into the new provisions of the Secure 2.0 Act of 2022 that are now effective. Discover how these changes impact you, including penalty-free withdrawals for emergencies, the introduction of Starter 401(K) plans for employers without a retirement plan, and options for employers to transition from SIMPLE retirement accounts to safe harbor 401(K) plans. Stay informed and empowered for a better financial future!

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Full transcript:

Hello, welcome to Arista Advice! Question of the week is: "Paul, I was reading about this SECURE 2.0". Yes, SECURE 2.0 - A lot of it is now in effect for 2024. There's some big changes. I'll save you the boring reading and let me just highlight four changes in regards to SECURE Act 2.0 in regards to 401(k) plans. Number one, section 115 says that you can take up to one emergency withdrawal a year for up to $1,000 per year relating to personal or family emergencies. Number two, section 121 allows for starter 401(k) plans for employers with no retirement plans. They can create a new plan designed for employers that do not sponsor retirement plan. It's got the new name of a starter 401(k) plan. Number three benefit is section 315 is you can have a penalty-free withdrawal from retirement plans for individuals in case of domestic abuse, $10,000 indexed or 50% of the value of the employee's vested account under the plan, and number four, section 332, employers are now able to replace their 401(K) plan with a SIMPLE plan, and you don't have to wait in the current year. You can start retroactive and immediately with this new SECURE Act 2.0 to start putting a big boy plan in place of a little boy plan so that employers and employees can put more money in their retirement plan for the current year. That is a really big improvement. As you'll see here on this chart, here's all of the four changes. Section 115, 121, 314, 332. In summary, including penalty-free withdrawals for emergencies, starter 401(k) plans for employers without a retirement plan, that the 401(k) plan can replace a SIMPLE IRA plan, and also, if there is domestic abuse, unfortunately, that has occurred, you can pull up to $10,000 and or up to 50% of the account value to help the victim, have access to their money to find resources and help to make things more accommodating for them. Hope this information is helpful. Remember, go to AristaWealth.com to get other videos, tools, tips and resources to help you live a life of significance.