The Secure and Private Information Act (SPIA 2.0): Key Provisions

Biden signed the Consolidated Appropriations Act, of 2023, on December 29, 2022. It encompasses several retirement tax rules in its 4,155-page length. You should speak with professional bookkeeping services in Aventura if you have any questions. 

First, let’s review the highlights:

Retirement plan enrollment is automatic

Employers who initiate new 401(k) or 403(b) plans in the tax year 2025 or later will be obliged to automatically enroll their employees. Staff members would put aside between 3 and 10 percent of their salaries. Each year, the employee’s share would increase by 1%, up to a maximum of 10%.

THE FEDERAL GOVERNMENT WILL MATCH YOUR SAVER’S CREDIT

Beginning in 2027, the federal government will match contributions to traditional individual retirement accounts (IRAs) and workplace 401(k) plans by up to 50%, for a total of $2,000 in matching funds per taxpayer. The federal government will automatically make the matching contribution to their IRA or 401(k).

401(k) WITHDRAWALS AND OTHER EMERGENCY FUNDS

Strategy for Saving in Case of Emergency. These days, businesses can link their employees’ retirement accounts to separate savings accounts for times of emergency. Workers might put away up to 3% of their pay into the savings account in case of an emergency.

Withdrawals from a 401(k) Plan for Nonbusiness Purposes A one-time distribution from an employee’s 401(k) plan is another benefit some companies provide. A worker might take out a maximum of $1,000 in a single distribution each calendar year. In 2024, this tax provision will be enforced.

REPAYMENTS ON STUDENT LOANS ARE CONSIDERED INCOME FOR PENSION PURPOSES.

After the year 2024, if an employee makes payments on their student loans to their loan servicer, the employer will make matching contributions to the employee’s retirement plan, regardless of whether or not the employee makes contributions to the plan themselves.

Temporary employees

From now until 2025, full-time employees must have been with the company for at least three years before they are eligible to enroll in the 401(k) retirement plan offered by their employer (SECURE Act 2.0, 2019). A year of service will be credited to the employee for every 12 months in which they have worked more than 500 hours.

Catch-up contributions to an Individual Retirement Account

Conforming to the rate of inflation. After 2023’s tax year end, the $1,000 catch-up payment will be linked to inflation and rounded to the next multiple of $100.