CHARLOTTE, N.C. — There's a good chance Congress will pass a new bill this year aimed at improving the U.S. retirement system that could help millions of Americans put away more money for their golden years.
It's called Secure Act 2.0, and it has three main changes for retirement savers. It passed the House with overwhelming bipartisan support.
First, employees will automatically be enrolled in their company's 401(k) program at a rate of at least 3%, unless they opt out. That rate would increase each year until workers were contributing 10% of their pay.
"What's nice about this is it forces us to save," Chris Hobart, the CEO of Hobart Financial Group, said. "Now, the thing is we can opt out, so we don't have to do it. The big difference is we are going to be required to do it as we join a firm."
The Senate version doesn't require automatic enrollment in a 401(k) but it does offer some incentives.
Secure 2.0 will also increase the age of "required minimum distributions," or when you have to start taking money out of your retirement accounts. It also gives a helping hand to people still trying to pay off their student loans.
"The IRS has basically said you have to start taking money out of those accounts at a certain age, and you have to pay tax on the money you take out," Hobart said. "But as we have an aging population, oftentimes people are having to take money out of retirement accounts that they don't need to access, and they might be draining an account quicker than they naturally would."
There are still a lot of changes that could happen to these bills as they work through the House and Senate, but experts say some of these provisions getting passed is a good step forward.
"The new provision says if you're making payments to your student loan out of pocket, the company now has the ability to match your student loan into the retirement account," Hobard said.
Experts say most retirement savers could benefit from the bill but some parts still need to be worked out before lawmakers take up a vote. Experts are hopeful the bill will be passed into law by the end of the year.
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