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The SECURE Act of 2019, followed by SECURE 2.0 in 2022, was intended to facilitate the implementation of retirement plans for companies of all stripes. A major goal was to reduce administrative burdens, particularly on small businesses, which should especially benefit from the extension of low-cost options and limited contribution matching.
When making minimum distributions from a retirement account, the required minimum distribution is a term that refers to the lowest amount of money that you must withdraw from said account every year once you reach the age limit. You can withdraw more than the minimum if you would like to, but keep in mind that the withdrawals you make will be included as part of your taxable income.
The SECURE Act 2.0 has a new provision that speaks to the nature of auto-enrollment for new 401(k) plans. All eligible hires will be required to enroll at a pretax rate of 3% at the minimum. Furthermore, the mandatory enrollment will come with an auto-escalation of 1% annually, but this is only effective until the salary reduction reaches 10% at a minimum and 15% at most. The goal is to incentivize the people who participate in retirement savings accounts.
As an employer, one of your main goals should be keeping your employees happy. And you can keep your employees happy without losing favorable 401(k) tax benefits, paying penalties or facing liabilities.
Qualified retirement plans — including 401(k) plans — are required to comply with specific rules, which are enforced by the Internal Revenue Service. These rules include guidance on:
The IRS has announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2019.
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