SECURE 2.0 Act brings changes to retirement planning

SYRACUSE — Passed at the end of 2022, the SECURE 2.0 Act contains many new benefits for employers as well as employees in hopes of boosting retirement savings across the country.

The act (formally known as the Consolidated Appropriates Act of 2023 (HR 2617) builds upon the 2019 SECURE Act with about 90 provisions that affect retirement-savings plans. The changes are designed to attack one major problem area, says Vicki Brackens, president and financial planner at Brackens Financial Solutions Network, LLC in Syracuse. 

“No one is saving enough,” she says. The level of savings just doesn’t match the level of need these days. “We are in sore need of increasing the amount of assets being put away for clients.”

Years ago, Brackens says, people would retire somewhere between 62 and 65 years of age and then live about five to six years. These days, she notes, people are living in retirement on average, 25 to 28 years — but only saving enough for that five to six-year span.

The SECURE 2.0 Act aims to change that through several means. First, is a new requirement for employers who start new retirement plans after Dec. 29, 2022 to automatically enroll employees in their retirement plan at a withholding rate of at least 3 percent, but no more than 10 percent, of eligible wages. Employees may opt out of this automatic savings.

Previously, this was an option where employees could opt in. Brackens says the change will result in more people saving for retirement. “People don’t opt out,” she says. “The level of participation is much greater.”

Employers may wonder why they should care whether or not their employees are saving for retirement or whether it’s worth it to offer a retirement plan, but it truly is important, Brackens says. “You care about your business, and your business is impacted by the wellbeing of your employees,” she says. Employee wellbeing drives productivity. In addition, employers that offer retirement planning may find it easier to attract and retain employees in a competitive marketplace.

One change in the SECURE 2.0 Act that should make employees happy and can be a powerful tool for employers looking to attract and retain workers is the ability to treat student-loan payments as retirement contributions for the purpose of qualifying contributions.

In short, employees in a workplace that offers this option no longer have to choose between making their student-loan payments and saving for retirement. “That’s big,” Brackens says.

Another change benefiting employees is the expanded age limit for required withdrawals from retirement accounts. Previously, people were required to start withdrawing from their retirement account at 72. That age is now 73 and will move to 75 in 2033.

“That’s a good thing because if you have other assets, you can use those,” Brackens says.

With so many changes, the best way for employers to get a full idea of how the SECURE 2.0 Act affects their business is to meet with their retirement-plan administrator, Brackens says.

“Your first line of offense and defense is your plan administrator,” she notes. At that meeting, employers should fully review their plan in order to make any necessary amendments.

The next step, she adds, is to communicate those changes to employees so they can take advantage of any new opportunities.

“Make time as an owner to review your own plan,” Brackens adds. It’s important that employers make sure they are taking full advantage of every opportunity for their own retirement as well.

Brackens Financial Solutions Network, located at 250 South Clinton St. in Syracuse, offers securities and retirement-plan consulting through LPL Financial, a registered investment advisor. Other services are offered through Stratos Wealth Partners.