The SECURE Act 2.0, enacted in 2022, brings several changes to retirement savings plans in 2025. Americans should be aware of these updates to maximize their retirement savings. Starting this year, new employees will be automatically enrolled in their employer’s retirement plan.
They must manually opt out if they choose not to contribute. Catch-up contribution limits are increasing for older workers. Those aged 60-63 can contribute up to $11,250 to their 401(k)s and $5,250 to SIMPLE IRAs.
These limits will be indexed to inflation after 2025.
Retirement plan updates for 2025
The 10% early withdrawal penalty will be waived in certain hardship situations.
This includes those with terminal illnesses, natural disaster victims, domestic abuse victims, and individuals facing financial emergencies. Looking ahead, the Required Minimum Distribution (RMD) age will increase to 75 in 2033. In 2026, the early withdrawal penalty will be waived for up to $2,500 in long-term care costs.
In 2027, the Saver’s Credit tax program will be replaced by a federal contribution matching program. Lower-income workers could receive up to $1,000 per year directly into their retirement plans. Americans should stay informed about these changes and adjust their retirement strategies accordingly.
Taking full advantage of the new benefits provided by SECURE 2.0 can help maximize retirement savings.
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