fbpx window.dataLayer = window.dataLayer || []; function gtag(){dataLayer.push(arguments);} gtag('js', new Date()); gtag('config', 'UA-156569540-1');

Tag: 401k Contributions

SECURE 2.0 Act Key Changes to Your Retirement Planning

SECURE 2.0 Act: Key Changes to Your Retirement Planning

Posted on by Steve LaFrance

Big changes are here for retirement planning in 2025! The SECURE 2.0 Act is designed to make saving for retirement easier and more accessible. Several key updates are taking effect this year that could impact your retirement savings strategy. 

Higher Catch-Up Contributions for Ages 60-63

Starting in 2025, individuals ages 60 to 63 can contribute more to their retirement plans. The new limit allows you to contribute up to $10,000 or 150% of the regular catch-up contribution limit for that year (indexed for inflation). This applies to 401(k), 403(b), and similar plans, providing a valuable opportunity for those nearing retirement to boost their savings. 

Mandatory Automatic Enrollment for New Plans

To encourage retirement savings, newly established 401(k) and 403(b) plans must automatically enroll employees at a contribution rate of 3% to 10%, with automatic annual increases of 1% until reaching 10% to 15%. Employees still have the ability to opt out or adjust their contribution rates. 

Emergency Savings Linked to Retirement Accounts

Employers can now offer Emergency Savings Accounts (ESAs) linked to their retirement plans. This allows employees to save up to $2,500 in post-tax contributions. 

Withdrawals are penalty-free to provide financial flexibility in case of emergencies and any unused ESA funds can be rolled over into the employee’s retirement account for long-term savings. 

SIMPLE and SEP Plan Enhancements

Employers offering SIMPLE IRAs can now:

  • Provide higher contribution limits for employees.
  • Make additional employer contributions beyond the standard match.

Additionally, both SIMPLE and SEP IRAs will allow Roth contributions, giving employees more tax-planning flexibility.

Starter 401(k) Plans

For employers without retirement plans, starter 401(k) plans offer an easy alternative. These plans feature auto-enrollment with contributions between 3% and 15% of salary. 

This option expands access to retirement savings for small businesses and employees without existing plans.

Long-Term, Part-Time Worker Eligibility

Part-time employees now have an easier path to retirement savings. Workers only need 500 hours per year for 2 consecutive years, down from 3 years, to be eligible for employer-sponsored retirement plans.

Roth Treatment for Catch-Up Contributions

Employees earning over $145,000 annually must now make Roth catch-up contributions (post-tax) rather than pre-tax contributions. This ensures tax revenue is collected upfront but allows for tax-free growth in retirement.

These important updates to the SECURE 2.0 Act can expand savings opportunities, encourage automatic enrollment, and provide more flexibility for both workers and retirees. If you’re unsure how these changes will impact your financial plan and future, reach out to the Blakely Financial team today to discuss strategies tailored to your goals. 

 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
What to Know About 401(k) Contributions

What to Know About 401(k) Contributions

Posted on by Robert Blakely

For 2024, the IRS announced a change in the contribution limit for employees who participate in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan. Annual contribution limits increased to $23,000 from $22,500 as a cost of living adjustment. The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan, remains unchanged at $7,500.

What does this mean for me?

If your employer offers benefits such as retirement plans, you will want to make sure you are taking advantage of everything offered to you to save for retirement. In order to take full advantage of this, it is important to understand any changes to contribution limits.

If you are already making the maximum contribution to your 401(k) each year, increases in contribution limits are good news for you, as you will be able to set even more money aside for retirement. If you are looking to maximize your retirement fund, you may want to consider contributing to both your employer-sponsored retirement plan and an IRA.

Making the Most of your 401(k)

One of the most important financial planning strategies when saving for retirement is maximizing your employer’s 401(k) match if offered. This extra money can significantly boost your retirement fund, especially if you consistently contribute enough to receive the maximum match. Take the time to thoroughly read over your company’s plan with your financial advisor to ensure you understand the specifics and make the most of your money.

Key Points to Remember About a 401(k)

Here are a few key points to keep in mind about a 401k):

  • A 401(k) is a retirement savings plan, so once you put money in, it is always best to leave it in.
  • There are penalties if you take the money out of your 401(k) before you hit retirement age.
  • If you change employers, you can roll your vested balance into your new employer’s 401(k) plan or into another qualifying retirement account such as an IRA.

Take advantage of any type of savings plan offered by your current employer. The earlier you begin and the more aggressive you are, the closer you will be to achieving your financial goals. If you have further questions about your 401(k), retirement savings, or any other aspect of your financial plan, it is always a great idea to speak with your financial advisor for guidance. Contact the Blakely Financial team today to get started.

If you are considering rolling over money from an employer-sponsored plan, you often have the following options: leave the money in the current employer-sponsored plan, move it into a new employer-sponsored plan, roll it over to an IRA, or cash out the account value. Leaving money in a plan may provide special benefits including access to lower-cost investment options; educational services; potential for penalty-free withdrawals; protection from creditors and legal judgments; and the ability to postpone required minimum distributions. If your plan account holds appreciated employer stock, there may be negative tax implications of transferring the stock to an IRA. Whether to roll over your plan account should be discussed with your financial advisor and your tax professional.
Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
401k Contributions Blakely Financial

401K Contributions: What you need to know

Posted on by Emily Promise

The IRS recently announced an increase in the maximum amount you can contribute to your employer-sponsored retirement plan in 2023. 

Due to high inflation, the cost-of-living adjustment means maximum retirement contributions will be rising almost 10% in the upcoming year. The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan has been increased to $22,500 ( which is up from $20,500 in 2022). Annual contribution limits have also been increased for traditional and Roth IRAs, up to $6,500 from the $6,000 limit of 2022.

 

What Does This Mean For Me?

If you are already making the maximum contribution to your 401(k) each year, this is good news for you, as you will be able to set aside even more money for retirement. If you are looking to maximize your retirement fund, you may want to consider contributing to both your employer-sponsored retirement plan and an IRA. 

 

If you cannot contribute the maximum amount to your retirement plan in 2023, don’t be concerned. Though the number has grown in recent years, only about 10-12% of people maximize their 401(k) contributions each year. Simply participating in an employer-sponsored plan puts you in a great position for a successful retirement, especially if you start early and remain consistent with your contributions. Remember that this increase is due to the high cost of living, so you may not have the funds left over to make your ideal contribution in 2023.  

Making the Most of your 401(k)

One of the most important financial planning strategies in saving for retirement is to maximize your employer’s 401(k) match. Taking advantage of that extra money can be a huge help to your retirement fund, especially if you are consistently contributing enough money to get the maximum match. If you are unsure about the specifics of your company’s plan, take the time to read over it thoroughly, perhaps with your financial advisor, so you can make the most of your money. 

A few key points to remember about a 401(k): it is a retirement savings plan, so once you put money in, it is always best to leave it in. There are penalties if you take the money out before retirement age. Also keep in mind that if you change employers, you can roll your vested balance into your new employer’s 401(k) plan or into another qualifying retirement account such as an IRA.

If you have questions, it is always a great idea to call your financial advisor for guidance. But no matter what, please take advantage of any type of savings plan your current employer offers as the earlier and more aggressive you are, the closer you will come to achieving your financial goals.

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.