There are several updates in the SECURE Act 2.0 that are going into effect in 2024. Some are related to emergency withdrawals from a tax-advantaged retirement account, such as a 401(k) or individual retirement account (IRA). These exceptions may help accountholders avoid a 10% tax penalty that typically applies to withdrawals made prior to age 59 ½.
Other updates are geared toward employers and expand on the types of contributions they can offer employees. Use this guide to familiarize yourself with some of these changes so you can make sound financial decisions in 2024.
Top SECURE Act 2.0 changes in 2024
Emergency expenses
Under the SECURE Act 2.0, employers can give you permission to take an annual distribution of up to $1,000 to cover a personal emergency with immediate need. However, you must repay the amount before you can take any further emergency distributions for future years. The only exception is if you make contributions that meet or exceed this amount.
Because this provision is optional, it’s important to check with your employer to verify they offer this and get more information on how to proceed.
Domestic abuse
In the event you experience domestic abuse involving a spouse or domestic partner, the SECURE Act 2.0 gives you the flexibility to make an emergency withdrawal from select retirement accounts, including 401(k)s. You can receive the lesser of $10,000 (indexed after 2024) or 50% of your vested account balance. The distribution must be made within a year of a domestic abuse incident.
Emergency withdrawals for domestic abuse differ slightly from other penalty-free distributions because they are subject to stipulations like joint-and-survivor annuity requirements. It’s best to review your options with a financial advisor.
Student loan payment match
With student loan payments back as of October of 2023, many workers are struggling to fit these payments into their budgets – especially after pandemic-related pauses. The SECURE Act 2.0 introduced an employer payment match that will help workers stay on top of payments without neglecting their retirement savings. It allows employers to match an employee’s student loan payment in the form of a contribution to their employer-sponsored retirement plan. This can be extremely beneficial for those who are behind on their retirement savings due to student loan debt. Plus, offering it as part of a benefits package could boost retention and recruiting efforts.
The above are just some of the changes introduced in 2024 through the SECURE 2.0 Act. Meet with a CFS Financial Advisor* to review your accounts so you can make a sound decision for your current and future needs. General Electric Credit Union (GECU) members have access to Investment Services, available through CUSO Financial Services, L.P. (CFS), to start the conversation.
