7 Ways SECURE 2.0 Could Benefit You in 2024

SECURE 2.0 could give you the boost you’ve been waiting for to move your savings journey forward.

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Updated July 18, 2024
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The SECURE 2.0 Act was signed into law by President Biden in late 2022. It includes some changes to the retirement saving laws that could help you transform your financial future.

As you save for the future, take a look at some of the ways the SECURE 2.0 Act could help you in 2024.

Eliminate your late tax debt

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How SECURE 2.0 helps

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Many of us know we should tuck away funds now when it comes to saving for the future. But the reality of most budgets makes saving easier said than done. That’s especially true when it comes to saving for long-term goals like retirement.

The SECURE 2.0 Act has made some helpful changes to retirement savings laws. These tweaks aim to make saving for your third act easier.

Self-funded emergency accounts instead of tapping 401(k)

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Life has a habit of throwing unexpected expenses your way. If you don’t have an emergency fund on hand, you might be left scrambling to cover the expense.

Some workers with savings invested in a 401(k) might withdraw funds from the account early to cover the immediate cost. The downside is that this action comes with penalties, and you’ll be taking a step back from your retirement savings goals.

To help solve this problem, the SECURE 2.0 Act allows employers to offer self-funded emergency savings accounts. Employees can have a portion of their salary directed to this account. Once they hit an emergency savings goal, the funds will be sent to the worker’s retirement account.

Employers can automatically enroll employees in emergency accounts

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In 2024, employers can automatically enroll qualifying employees and funnel 3% of the worker’s salary to the emergency fund. Although employees can opt out, this offers an automated way to save for unexpected expenses.

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Additional penalty-free withdrawal situations

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In the past, making an early withdrawal from your 401(k) usually resulted in a 10% penalty tax. If you make a withdrawal before age 59 1/2, the new rules expand the circumstances for when the withdrawal can be made penalty-free.

Some of the new penalty-free withdrawal situations include:

  • You have a terminal illness.
  • You can take out up to $22,000 to pay for expenses after a federally declared natural disaster.
  • You can take out up to $1,000 for unforeseeable or immediate financial needs due to a personal emergency.

You may only take a penalty-free withdrawal for one of the reasons listed above each year. If you make a withdrawal due to a particular reason, you can’t make a withdrawal for the same issue for at least three years.

Student debt help

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Building a retirement nest egg can be difficult due to your student loan payments. The SECURE 2.0 Act offers a unique solution.

If you are making payments on your student loans, your employer can match that amount and contribute the funds to your retirement account. 

So, employees with a 401(k), 403(b), or SIMPLE IRA can take advantage of the benefits of matching funds even if their student loan payments prevent them from making a contribution to their retirement account.

Catch-up contributions

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Savers age 50 and older can make catch-up contributions. In 2024, the catch-up contribution allows savers to contribute an additional $1,000 to their IRA. That’s on top of the regular limit of $7,000.

In 2025 and 2026, the catch-up contributions limits will grow. For savers starting late, the increased catch-up contributions could help pave the way for a more comfortable retirement.

Required minimum distributions don’t start until later

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Required minimum distributions (RMDs) force you to start making annual withdrawals from your pre-tax retirement accounts. In the past, RMDs started when you reached age 70 1/2. Being required to take these funds each year could put pressure on your finances later on.

The SECURE 2.0 Act pushed back the RMD age. Now, you won’t have to take the RMD from accounts like your 401(k) or IRA until age 73. With this age increase, you can give your funds a bit more time to grow before pulling them out.

Find lost savings

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When you move from job to job, it’s not uncommon to lose track of a 401(k) or other workplace retirement account you started along the way. The SECURE 2.0 Act tasked the Department of Labor with creating a searchable database for retirement plans by the end of 2024.

If you’ve lost track of some funds, this forthcoming tool could help you recover them.

Bottom line

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Saving for retirement is a major financial task. It’s important to start early if you want to build wealth to carry you through your retirement. Even if you can’t save too much, investing any amount is worthwhile.

For savers with a lot of assets, it’s worth asking if you can retire early. A lifetime of saving could help you reach retirement earlier than you think.

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Sarah Sharkey

Sarah Sharkey is a personal finance writer who enjoys diving into the details to help readers make more informed decisions. She covers mortgages, insurance, money management, travel, and more.