Employers can ramp up employees’ savings
The new law is good news for mid-career employees! Here’s why:
Younger people usually have different financial priorities and, sadly, a vast amount of them don’t think about retirement savings until it’s too late. So although employees would be enrolled in a 401(k) plan automatically, many of them would procrastinate. Another reason for this is thought to be the nature of increased contributions which start out at 3% and go up to 6% by year 4.
But, of course, there comes a time when employees regret neglecting their participation. That’s where the SECURE Act comes in. The previous 10% of a salary cap in someone’s first year of contributions has been boosted to 15% in the second year. Changing this restriction is thought to be a great way for mid-career employees to catch up.
