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You’ve likely heard about the changes to the original SECURE Act of 2019, aptly named the SECURE Act 2.0. But unless you’ve sat down to read the 350-page document – I know. In your spare time, right? – you might not know how it will affect you.

Here are four key takeaways that you should be aware of:

Maximum Increase in Retirement Accounts

Beginning in 2025, those retirement plan participants who are aged 60 to 63 can save even more in their 401(k), 403(b), or 457(b) plans. Currently, participants who are 50 or over can save an additional $7500 over the maximum contribution of $22,500. Starting in 2025, those aged 60 to 63 can save an *additional* 50% of the catch-up.

For example, if the catch-up amount stays at $7500, a 60-year-old can save an additional $3750. Additional to note: If your income is in excess of $145k, your catch-up contributions must be made as Roth (after-tax) contributions.

Student Loan Payments and Matching 401(k) Contributions

Today, many employees are missing out on the funds employers match when they make a 401(k) contribution. Beginning in 2024, employers can provide those matches based on student loan payments. Stated a different way, your student loan payments count as if you made a contribution to your 401(k) and your employer will match those funds in your 401(k).

Yahoo Finance provides this example of how this works:

The situation: To give a better visual imagine Dave, a fresh college graduate with student loan debt starts a new job that offers a salary plus benefits. One of the benefits is a 3% company match. Traditionally this match applies to his retirement contribution, so when Dave contributes 3% of his salary to his company-sponsored 401(k), he’s met with an additional 3% from his company.

The problem: When Dave contributes to his 401(k), it puts him in a great spot for retiring on time down the road, but he now can’t afford to save for a house and pay down his student loan debt at the same time. He has to choose one or the other. One leaves him as a prolonged renter spending money on an asset that he’ll never own; the other leaves him extending student loan payoff and accruing additional interest.

The solution: Student loan matching allows his company to match his student loan payments instead of a retirement contribution. So the result looks like this:

Dave is able to pay down his student loans avoiding additional interest charges. Dave can get a jump start on saving for a home preserving thousands on potential rent. Dave gets a compounding effect from his company’s retirement plan contributions.

Unused 529 Plan Funds Can be Rolled into Roth IRAs

I’m often asked by parents who are considering opening a 529 college savings account for their child, “What if they don’t use it?”

Starting in 2024, parents and other loved ones no longer need to worry, at least for $35,000 worth. If the 529 has been open for at least 15 years, individuals will be allowed to roll up to $35k from a 529 to a Roth IRA in the name of the student beneficiary.

Great news for those of you who have “lost” old 401(k) accounts

Another worry I often hear is regarding old employer retirement accounts. Maybe you had a modest amount in your 401(k) and then left that job. Perhaps you’ve moved many times, and that old company has merged with another. It can be very difficult to find YOUR money.

The SECURE Act 2.0 will establish a “Lost and Found” for old retirement accounts. The Dept of Labor has two years to get this done, so in the meantime, if you’ve lost an account, let me help you find it!

I know that this new legislation can be hard to navigate. We all look at this information and ask the question, “What does this mean for ME?” If you have questions about these changes and want to help ensure you’re not missing out on anything that might benefit you, let’s talk.

If you’ve just started a new job, chances are your old retirement plan isn't top-of-mind for you right now. But putting off dealing with it for too long can be a big mistake. Here are your options, and a few pitfalls to be aware of.

Leave It Where It Is 

If your balance is greater than $5,000 you are able to leave your account in your former employer's plan. This can be a good option if the plan has low administrative fees and inexpensive investment choices. Beware the trap of thinking that the administrative fees are the only costs: mutual funds have fees that are not visible on your account statement. Call the provider and ask what the fee range for mutual funds is and if there are any additional charges.

Move to Your New 401(k)
If your new employer offers a 401(k) this again could potentially be a good option based on fees and investments. But once you move money into your new employer's plan, you cannot move it out until you leave that job. This limits your choices to what your employer offers and that is subject to change at any time.

Move to a Rollover IRA (or Rollover Roth IRA)
With this option, you can move your money to an IRA wherever you like. Popular choices are mutual fund companies, brokerage houses or banks. A less expensive alternative is a do-it-yourself account at an online provider. When you've chosen to open your own IRA, you can change investments or providers at any time through a trustee-to-trustee transfer. This option gives you the most flexibility, but can be tricky without professional help. Your best bet is to enlist the help of a professional financial planner. He or she can guide you through the many choices, and help you find inexpensive investments.

Beware These Pitfalls!
- Moving assets in any way other than a rollover. There are ways to move the money to yourself and then to another retirement account within a given window, but this is VERY tricky and can have disastrous consequences if done improperly.
- You have an outstanding loan against your 401(k). This will need to be repaid as soon as you leave your job. If you are not able to repay this, it will be considered a withdrawal and you will owe taxes, and potentially penalties.
- You are over 55 years old, but not yet 59 1/2. You are allowed to withdraw funds from a 401(k) in this situation, but not from an IRA. If you plan to retire (voluntarily or involuntarily) before you turn 59 1/2, you should consider leaving some, if not all of your assets in your former employer plan.
- You have unvested contributions. Your company may have put restrictions on availability of employer contributions, based on years of service. Your account balance will include both employee and employer contributions, but this may not all be available to you. Any unvested contributions were forfeited when you left your job.

Workers are changing jobs with much more frequency than in the past. One last bit of advice: it is very easy to lose track of old 401(k) accounts. Companies move, you move, companies go out of business. While that money is always yours, tracking it down after many years can be extremely difficult. Consolidate all your retirement plans, or make sure you stay on top of where they are.

Congratulations on your new job! Don't forget to sign up for your new 401(k)!

Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through GPS Wealth Strategies Group LLC, a registered investment advisor. GPS Wealth Strategies Group LLC and Aspen Wealth Management are separate entities from LPL Financial.

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Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through GPS Wealth Strategies Group LLC, a registered investment advisor. GPS Wealth Strategies Group LLC and Aspen Wealth Management are separate entities from LPL Financial.

The LPL Financial registered representative associated with this website may discuss and/or transact business only with residents of the states in which they are properly registered or licensed. No offers may be made or accepted from any resident of any other state.
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