
<p>Retirement insights from a Colorado PERA perspective</p>



<p></p>


A distant view shows a mountainous landscape with sloping peaks, green trees in the foreground, and a cloudy sky above.


<h2 class="wp-block-heading" style="font-size:28px"><a href="https://content.copera.org/news-you-should-know-lawmakers-reintroduce-federal-auto-ira-bill/" target="_blank" rel="noreferrer noopener"><strong>Federal Automatic IRA Bill Introduced in the House | TheStreet</strong></a></h2>



<p>Lawmakers in Congress have reintroduced a bill that aims to boost retirement savings for the millions of Americans who don’t have access to a retirement plan at work. The Automatic IRA Act of 2024 would create a system for automatically enrolling workers in individual retirement accounts (IRAs) similar to the auto-enrollment plans that several states, including Colorado, have set up in recent years.</p>



<h2 class="wp-block-heading" style="font-size:28px"><a href="https://www.cnbc.com/2024/02/09/limiting-retirement-plan-tax-perks-may-help-social-security-experts-say.html" target="_blank" rel="noreferrer noopener"><strong>Limiting Retirement Plan Tax Perks May Help Social Security, Experts Say | CNBC</strong></a></h2>



<p>A new research paper from the Center for Retirement Research at Boston College is making a splash for its controversial proposal for shoring up Social Security’s finances. The paper promotes the idea of eliminating tax incentives for defined contribution plans like 401(k)s. That means workers would pay tax on their retirement plan contributions, and that tax revenue could be put toward improving Social Security’s funding. The paper has received pushback from those who argue workers will be less likely to save for retirement without tax incentives.</p>



<h2 class="wp-block-heading" style="font-size:28px"><a href="https://finance.yahoo.com/news/why-the-1960s-can-help-us-understand-our-confusing-economic-mood-163052769.html" target="_blank" rel="noreferrer noopener"><strong>Why the 1960s Can Help Us Understand Our Confusing Economic Mood | Yahoo! Finance</strong></a></h2>



<p>Despite a growing economy, public sentiment remains stubbornly low, baffling some economists and political experts. In some ways, our current economic mood mirrors the 1960s, a decade marked by a booming economy but also social upheaval and, toward the end of the decade, rising inflation.</p>



<h2 class="wp-block-heading" style="font-size:28px"><a href="https://www.kiplinger.com/retirement/guide-to-caring-for-your-aging-parents" target="_blank" rel="noreferrer noopener"><strong>Caring for Your Aging Parents: A Seven-Step Guide | Kiplinger</strong></a></h2>



<p>Finding yourself responsible for the care of people who used to care for you can be an overwhelming experience. Here are a few key considerations and tips for tackling them, from finances and logistics to remembering your own needs and capabilities.</p>



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<p><em>News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.</em></p>


News You Should Know: Lawmakers Reintroduce Federal Auto-IRA Bill


<p>The Internal Revenue Service (IRS) announced inflation adjustments for many tax provisions in 2024, including higher contribution limits for various types of accounts and updated tax brackets.</p>



<h4 class="wp-block-heading"><strong>Retirement account contribution limits</strong></h4>



<p>The IRS <a href="https://www.irs.gov/newsroom/401k-limit-increases-to-23000-for-2024-ira-limit-rises-to-7000" target="_blank" rel="noreferrer noopener">increased contribution limits</a> for individual retirement accounts (IRAs), as well as 401(k), 403(b), and most 457 plans.</p>



<p>The maximum amount a worker can contribute to 401(k)/403(b)/457 plans is $23,000 in 2024, an increase of $500. The IRA contribution limit also increased $500 to $7,000. Catch-up contribution limits remain unchanged in 2024.</p>



<h4 class="wp-block-heading"><strong>HSA &amp; FSA contribution limits</strong></h4>



<p>The amount workers can contribute to medical savings accounts will also increase in 2024.</p>



<p>Individuals enrolled in a high deductible health plan (HDHP) with a health savings account (HSA) will be able to contribute up to $4,150 and those with family coverage will be able to save a maximum of $8,300.</p>



<p>For workers who don’t have an HDHP with an HSA and instead use a flexible spending account (FSA), the maximum contribution for 2024 is $3,200. For plans that allow unused balances to roll over, the maximum amount that can be rolled over will increase to $640.</p>



<h4 class="wp-block-heading"><strong>2024 tax rates</strong></h4>



<p>Below are <a href="https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2024" target="_blank" rel="noreferrer noopener">updated marginal tax rates</a> for single taxpayers and married couples filing jointly. See the <a href="https://www.irs.gov/irb/2023-48_IRB#REV-PROC-2023-34" target="_blank" rel="noreferrer noopener">IRS website</a> for more tax tables and additional details. Since these changes will take effect for tax year 2024, they will generally apply to tax returns filed in 2025.</p>



<ul>
<li><strong>10%</strong> for incomes of $11,600 or less ($23,200 for married couples filing jointly)</li>



<li><strong>12%</strong> for incomes over $11,600 ($23,200 for married couples filing jointly)</li>



<li><strong>22%</strong> for incomes over $47,150 ($94,300 for married couples filing jointly)</li>



<li><strong>24%</strong> for incomes over $100,525 ($201,050 for married couples filing jointly)</li>



<li><strong>32%</strong> for incomes over $191,950 ($383,900 for married couples filing jointly)</li>



<li><strong>35%</strong> for incomes over $243,725 ($487,450 for married couples filing jointly)</li>



<li><strong>37%</strong> for incomes over $609,350 ($731,200 for married couples filing jointly)</li>
</ul>



<p>In addition to updated tax rates, the IRS announced increases to the standard deduction for tax year 2024:</p>



<ul>
<li><strong>Single taxpayers and married couples filing separately:</strong> $14,600 ($750 increase)</li>



<li><strong>Heads of household:</strong> $21,900 ($1,100 increase)</li>



<li><strong>Married couples filing jointly:</strong> $29,200 ($1,500 increase)</li>
</ul>



<p>Visit the <a href="https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2024" target="_blank" rel="noreferrer noopener">IRS website</a> for more adjustments and tax changes for 2024.</p>



<h4 class="wp-block-heading"><strong>PERA benefits and taxes</strong></h4>



<p>Colorado PERA benefits are subject to federal income tax, as well as applicable state and local taxes. PERA retirees who would like to update their tax withholding can do so by <a href="https://www.copera.org/member-login-registration" target="_blank" rel="noreferrer noopener">logging in</a> to their secure member account or completing a paper Form W-4P. Learn more information at <a href="https://www.copera.org/taxes-on-benefits" target="_blank" rel="noreferrer noopener">copera.org/taxes-on-benefits</a>.</p>


Updated Tax Brackets, Contribution Limits, Other Changes for 2024


<h4 class="wp-block-heading"><a href="https://www.nirsonline.org/reports/closingthegap/" target="_blank" rel="noreferrer noopener"><strong>Closing the Gap: The Role of Public Pensions in Reducing Retirement Inequality | National Institute on Retirement Security</strong></a></h4>



<p>Saving enough money for retirement can be a challenge, and research has shown women and minorities are more likely to be behind on reaching their savings goals. New research from the National Institute on Retirement Security finds the steady, reliable income in public pension plans like Colorado PERA helps level the playing field in retirement, with the strongest impacts on Black and Latino retirees.</p>



<h4 class="wp-block-heading"><a href="https://money.com/fed-interest-rate-pause-mortgages-savings/" target="_blank" rel="noreferrer noopener"><strong>What the Fed’s Interest Rate Pause Means for Mortgages, Savings Accounts and More | Money</strong></a></h4>



<p>The Federal Reserve announced that it is holding its key interest rate steady — for now. Officials say another rate increase is possible before the end of the year, but here’s what to expect in the meantime.</p>



<h4 class="wp-block-heading"><a href="https://www.nextavenue.org/elder-fraud-losses-rise/?mod=djem_b_retirement0917" target="_blank" rel="noreferrer noopener"><strong>Investment Fraud Soars | Next Avenue</strong></a></h4>



<p>Investment fraud schemes targeting older Americans have skyrocketed, totaling nearly $1 billion in 2022. Experts say limited knowledge of cryptocurrency and other new types of payments is one factor behind the rise. Here are some of the common types of scams to watch out for.</p>



<h4 class="wp-block-heading"><a href="https://www.investopedia.com/irs-update-roth-catch-up-rules-and-transition-period-7963382" target="_blank" rel="noreferrer noopener" class="broken_link"><strong>What To Know About IRS&#8217; Catch-Up Contribution Guidance | Investopedia</strong></a></h4>



<p>Late last year, Congress passed a package of retirement-related reforms known as SECURE 2.0. That bill included an important change to catch-up contributions to retirement accounts for workers age 50 and older. The IRS has since said it will allow a grace period of several years to allow people to adjust to the new rules.</p>



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<p><em>News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.</em></p>


News You Should Know: How Pensions Help Address Inequality in Retirement


<p>Generation X – the group of Americans born between 1965 and 1980 &#8212; is often referred to as the “Forgotten Generation.” It’s a smaller group than both the Baby Boomers that came before and the Millennial generation that followed.</p>



<p>With the oldest members of Generation X soon approaching retirement, it’s important to look at where they stand financially. New <a href="https://www.nirsonline.org/reports/genx/" target="_blank" rel="noreferrer noopener">research from the National Institute on Retirement Security</a> (NIRS) finds that many members of Gen X are struggling to meet retirement savings targets and risk having a significantly lower standard of living when they stop working.</p>



<h4 class="wp-block-heading"><strong>Access to employer-sponsored retirement plans</strong></h4>



<p>According to the NIRS researchers, the decline in the number of employers offering defined benefit (DB) pension plans is a major factor in Gen X’s retirement readiness. In 1980, more than 80 percent of workers in the private sector had access to a DB plan, according to the U.S. Bureau of Labor Statistics.</p>



<p>Today, few private employers offer pensions to their workers. Most employees only have the option to save for retirement in employer-sponsored defined contribution (DC) plans like 401(k)s or on their own in individual retirement accounts (IRAs). According to NIRS, just 14 percent of Gen Xers were participating in a DB plan as of December 2020.</p>



<p>The potential challenge of relying solely on DC plans is a person’s retirement income depends on how much they contributed over the course of their working years and the investment gains they may have earned over that time.</p>



<p>Since Generation X was the first generation to enter the workforce when DB plans were on the decline, they’re the first to see the effects of that shift on their finances on a large scale.</p>



<h4 class="wp-block-heading"><strong>Generation X’s retirement readiness</strong></h4>


<div class="wp-block-image">
<figure class="alignright size-large is-resized"><a href=""><img decoding="async" loading="lazy" src="" alt="" class="wp-image-5603" width="256" height="169"/></a><figcaption class="wp-element-caption">Image courtesy: National Institute on Retirement Security (click/tap to enlarge)</figcaption></figure></div>


<p>The NIRS researchers found that just over half of Gen Xers participated in an employer-sponsored retirement plan in in 2020. Of those contributing to a private account like a 401(k), the average balance was $129,994. The median account balance, which isn’t skewed by high earners, was $10,000 for individuals and $40,000 for households.</p>



<p>Additionally, 40 percent of Gen Xers have accounts with no balance at all, according to NIRS.</p>



<p>The researchers warn that retirees who don’t have enough savings to live on will have to rely on Social Security, which wasn’t designed as a full income replacement. In 2023, the average Social Security benefit is about $1,700 a month.</p>



<p>It’s not all bad news, however. The youngest Gen Xers are in their early 40s, which are often a person’s prime earning years. That means younger members of the generation still have time to bolster their savings and improve their retirement security.</p>



<h4 class="wp-block-heading"><strong>How PERA combines the best of DB and DC plans</strong></h4>



<p>The State of Colorado created PERA in August 1931 and since then, PERA has grown to include DB and DC offerings covering more than 670,000 current and former public employees.</p>



<p>The PERA Defined Benefit Plan is available to all PERA members and is designed to provide lifetime income in retirement. The <a href="https://peraontheissues.com/pera-by-the-numbers-a-closer-look-at-the-2022-annual-report/" target="_blank" rel="noreferrer noopener">average monthly benefit was $3,238</a> in 2022.</p>



<p>Some members have a choice between the PERA DB Plan and the PERA DC Plan, which features a variety of low-cost investment options for members who want to invest their retirement funds on their own. Members can also annuitize their account balance at retirement to convert it to regular monthly income.</p>



<p>PERA also offers the optional <a href="https://www.copera.org/peraplus-401-k-457-plans" target="_blank" rel="noreferrer noopener">PERAPlus</a> 401(k) to all members, and some PERA employers also offer the PERAPlus 457 Plan. Both are low-cost options for setting aside extra money for retirement, and both have Roth options for saving after-tax dollars.</p>



<p>Together, PERA’s defined benefit and defined contribution plans help ensure that Colorado’s public employees have the income they need in retirement, regardless of which generation they’re a member of.</p>


How the Shift Away From Pensions Has Affected Gen X’s Retirement Readiness


<h4 class="wp-block-heading"><a href="https://www.investopedia.com/fidelity-americans-increase-retirement-savings-7504228" target="_blank" rel="noreferrer noopener"><strong>Americans’ Retirement Savings Rise for Second Straight Quarter | Investopedia</strong></a></h4>



<p>There’s some good news in the retirement savings world: workers’ 401(k), 403(b), and IRA balances are on the rise, and it’s not just because of market performance. An analysis by Fidelity found that employer contributions to retirement accounts hit a record high of 4.8% earlier this year. In case you weren’t aware, PERA offers optional <a href="https://www.copera.org/peraplus-401-k-457-plans" target="_blank" rel="noreferrer noopener">PERAPlus 401(k) and 457 Plans</a> to members who want to save additional money for retirement.</p>



<h4 class="wp-block-heading"><a href="https://www.federaltimes.com/management/career/2023/05/22/social-security-proposes-making-virtual-benefit-hearings-permanent/" target="_blank" rel="noreferrer noopener"><strong>Social Security Proposes Making Virtual Benefit Hearings Permanent | Federal Times</strong></a></h4>



<p>The Social Security Administration found success with remote hearings during the COVID-19 pandemic, so the agency is looking to make phone and video appearances a permanent option. The SSA says that in addition to being more convenient for claimants, allowing remote hearings going forward will save money and allow the agency to be more efficient as it works through a large backlog of cases.</p>



<h4 class="wp-block-heading"><a href="https://www.coloradopolitics.com/governor/polis-signs-bills-colorado/article_d4a700b4-ff30-11ed-97d7-eb51c53bd992.html" target="_blank" rel="noreferrer noopener"><strong>Colorado Gov. Jared Polis Signs 68 New Bills Into Law | Colorado Politics</strong></a></h4>



<p>Gov. Jared Polis has signed dozens of bills into law following the conclusion of the 2023 legislative session, including SB23-056, which aims to recompense PERA for the cancellation of the previously scheduled July 2020 direct distribution of $225 million.</p>



<h4 class="wp-block-heading"><a href="https://www.kiplinger.com/retirement/your-most-valuable-retirement-asset-could-be-your-home" target="_blank" rel="noreferrer noopener"><strong>Your Most Valuable Retirement Asset Could Be Your Home | Kiplinger</strong></a></h4>



<p>If you own your home, you could be sitting on an important chunk of retirement income. Recent research found that about 80% of older Americans own a home, which accounts for a significant portion of their net worth. While many people focus on their retirement plan(s) and savings for retirement income, that home equity can be an important part of the picture.</p>



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<p><em>News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.</em></p>


News You Should Know: Retirement Savings on the Rise


<h4 class="wp-block-heading"><a href="https://www.investopedia.com/fed-squeezes-inflation-and-economy-harder-with-a-tenth-possibly-final-rate-hike-7488377?hid=a526fec8f4710d579c898e2c1bdd1b7d2a8953bb&amp;did=9039691-20230503&amp;utm_campaign=market-sum_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=050323" target="_blank" rel="noreferrer noopener"><strong>Fed Squeezes Inflation and Economy Harder With a Tenth—Possibly Final—Rate Hike | Investopedia</strong></a></h4>



<p>The Federal Reserve once again raised its key interest rate as it tries to fight inflation, bringing the rate to its highest point since 2007. Officials say rate hikes appear to be working and inflation is slowing, suggesting the Fed is taking more of a wait-and-see approach on interest rates going forward.</p>



<h4 class="wp-block-heading"><a href="https://content.copera.org/news-you-should-know-fed-raises-rates-again-but-may-pause-going-forward/" target="_blank" rel="noreferrer noopener"><strong>State-Run Retirement Programs Spurring More Private-Sector Plans | Pensions &amp; Investments</strong></a></h4>



<p>A growing number of states — including Colorado — are now offering government-run IRA-style retirement plans for private-sector workers whose employers don’t offer a 401(k) or other plan. Rather than discouraging uptake of employer-based retirement plans, recent research finds the state-run plans seem to be encouraging more businesses to offer retirement plans of their own.</p>



<h4 class="wp-block-heading"><a href="https://www.cnbc.com/2023/04/26/medicare-will-cover-alzheimers-treatment-leqembi-after-fda-approves.html" target="_blank" rel="noreferrer noopener"><strong>Medicare Will Cover Alzheimer&#8217;s Treatment Leqembi After FDA Approves | CNBC</strong></a></h4>



<p>Medicare has faced scrutiny over its decisions to cover or not cover certain new Alzheimer’s drugs. In a recent hearing before Congress, the administrator of the Centers for Medicare and Medicaid Services said Medicare will cover the new drug Leqembi for eligible patients if it’s granted full approval by the FDA this summer.</p>



<h4 class="wp-block-heading"><a href="https://coloradosun.com/2023/05/09/2023-colorado-legislature-bills/" target="_blank" rel="noreferrer noopener"><strong>101 Bills Debated in the Colorado Legislature in 2023 That You Should Know About | Colorado Sun</strong></a></h4>



<p>The Colorado Sun combed through the 600-plus bills introduced at the Capitol this year to find the ones that will affect — or would have affected — your life. Spoiler: while several different tax credits were deliberated and some passed, HB23-1016 (Temp Tax Credit For Public Service Retirees) did not make it out of the House.</p>



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<p><em>News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.</em></p>


News You Should Know: Fed Raises Rates Again But May Pause Going Forward


<p>The last week of February is America Saves Week. From Feb. 27 to March 2, financial institutions across the country will aim to raise awareness about the importance of saving money and share tips for saving more.</p>



<p>The week comprises five themes:</p>



<ul>
<li><strong>Monday:</strong> Saving automatically</li>



<li><strong>Tuesday:</strong> Saving for the unexpected</li>



<li><strong>Wednesday:</strong> Saving for major milestones</li>



<li><strong>Thursday:</strong> Paying down debt is saving</li>



<li><strong>Friday:</strong> Saving at any age</li>
</ul>



<p>Whatever the goal, setting money aside for the future is vital to financial security, and recent polling shows it’s something that many Americans continue to struggle with.</p>



<h4 class="wp-block-heading"><strong>The state of savings in 2023</strong></h4>



<p>Bankrate has been polling Americans about their emergency savings since 2014. <a href="https://www.bankrate.com/banking/savings/emergency-savings-report/" target="_blank" rel="noreferrer noopener">This year’s survey</a>, which was conducted in December, found less than half of respondents could pay for an emergency expense from their savings, and reliance on credit cards is at an all-time high.</p>



<p>If faced with a $1,000 expense for an emergency room visit or a car repair, 43 percent of people told Bankrate that they would use their savings to pay the expense. Twenty-five percent of people said they would use a credit card, which is the highest percentage since the survey began in 2014.</p>



<p>The Bankrate survey also found that people across generations are concerned about their level of emergency savings — particularly younger generations. Bankrate said 85 percent of Generation Z and 79 percent of Millennials are worried about having enough savings to cover a month’s worth of living expenses, compared to 69 percent of Generation X and 53 percent of Baby Boomers.</p>



<p>When it comes to retirement savings, Americans express similar sentiments. According to the <a href="https://www.fool.com/research/average-retirement-savings/" target="_blank" rel="noreferrer noopener">most recent survey from the Federal Reserve</a>, less than half of respondents nearing retirement age said they felt like they were on track. That survey also found that a quarter of all non-retirees had no retirement savings at all.</p>



<h4 class="wp-block-heading"><strong>PERA offers built-in options for additional savings</strong></h4>



<p>Colorado PERA members are already saving automatically for retirement with every paycheck. PERA also offers several options for members who want to set aside even more money.</p>



<p>All PERA members have access to the optional <a href="https://www.copera.org/peraplus-401-k-457-plans" target="_blank" rel="noreferrer noopener">PERAPlus 401(k)</a> to set aside extra pre-tax money each month. Some employers also offer the PERAPlus 457 plan. Both plans feature a variety of investment choices as well as <a href="https://peraontheissues.com/pera-offering-new-lifetime-income-options-to-dc-plan-participants/" target="_blank" rel="noreferrer noopener">lifetime income options</a> to make savings go further in retirement.</p>



<p>America Saves Week is a great opportunity to take stock of your savings and make a plan for saving more. If you’re already enrolled in a PERAPlus plan, <a href="https://www.copera.org/member-login-registration" target="_blank" rel="noreferrer noopener">log in today</a> to check your balance, and consider increasing your contributions if you’re not on track to meet your goals.</p>



<p>Follow Colorado PERA on <a href="https://www.facebook.com/ColoradoPERA/" target="_blank" rel="noreferrer noopener" class="broken_link">Facebook</a>, <a href="https://twitter.com/ColoradoPERA" target="_blank" rel="noreferrer noopener">Twitter</a> and <a href="https://www.copera.org/do-you-have-a-savings-plan-for-2023" target="_blank" rel="noreferrer noopener" class="broken_link">Instagram</a> for more tips during America Saves Week.</p>


Do You Have a Savings Plan for 2023?


<h4 class="wp-block-heading"><a href="https://coloradosun.com/2023/01/20/colorado-retirement-plan-secure-savings/" target="_blank" rel="noreferrer noopener"><strong>Colorado Retirement Plan Launches for Those Without One | The Colorado Sun</strong></a></h4>



<p>The Colorado SecureSavings plan is now officially up and running. The program, which covers private-sector workers who do not have access to a retirement plan through their employer, sets up a Roth IRA that employees can take with them when they move jobs.</p>



<h4 class="wp-block-heading"><a href="https://www.cbsnews.com/news/debt-limit-ceiling-impact-on-your-finances-social-security-medicare-401k/" target="_blank" rel="noreferrer noopener"><strong>Debt Ceiling: 3 Ways Your Finances Could be Affected | CBS News</strong></a></h4>



<p>Earlier this month, the federal government hit its debt limit of $31.4 trillion. The U.S. Treasury is taking steps to avoid defaulting on its debt while Congress decides on action. While a default is unlikely, it could have wide-reaching effects on the economy and Americans’ finances.</p>



<h4 class="wp-block-heading"><a href="https://www.kiplinger.com/taxes/tax-season-is-here-what-to-know" target="_blank" rel="noreferrer noopener"><strong>Tax Season 2023: Tax Day, Key Changes, and Smaller Refunds? | Kiplinger</strong></a></h4>



<p>The Internal Revenue Service is now accepting tax returns for tax year 2022. For most people, the filing deadline this year is Tuesday, April 18. Here are other key details to know before filing.</p>



<h4 class="wp-block-heading"><a href="https://www.cnbc.com/2023/01/23/generation-x-carries-the-most-credit-card-debt-study-shows.html" target="_blank" rel="noreferrer noopener"><strong>Generation X Carries the Most Credit Card Debt, Study Shows | CNBC</strong></a></h4>



<p>Americans’ credit card debt is on the rise — totaling $930 billion in the third quarter of 2022 — but it appears Generation X may be carrying more of that burden than other generations. According to a new survey, Gen Xers owe an average of $7,004 on their credit cards. Compare that with $6,785 for Baby Boomers, $5,928 for Millennials, and $2,876 for Generation Z.</p>



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<p><em>News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.</em></p>


News You Should Know: Colorado SecureSavings Plan Up and Running


<p>In late December, Congress passed a <a href="https://www.congress.gov/117/bills/hr2617/BILLS-117hr2617enr.pdf" target="_blank" rel="noreferrer noopener">$1.7 trillion spending bill</a> to keep the government funded through September. Included in that bill, now signed into law by President Biden, was a package of retirement-related reforms collectively known as the SECURE 2.0 Act.</p>



<p>SECURE 2.0 builds on the original SECURE Act from 2019, which aimed to improve access to retirement savings for all Americans.</p>



<p>There are nearly 100 provisions in SECURE 2.0. While most of them aren’t particular to public defined benefit plans like Colorado PERA, many of them could affect public sector workers and retirees who have money saved in a defined contribution account like a 401(k) or 457 plan.</p>



<p>Here are some of the major provisions included in the legislation and what they mean.</p>



<h4 class="wp-block-heading"><strong>Automatic enrollment in 401(k) plans</strong></h4>



<p>One of the biggest changes resulting from SECURE 2.0 will be automatically enrolling workers in their employer’s 401(k) plan starting in 2025. Unless they opt out, eligible employees will automatically contribute at least 3 percent of each paycheck to their retirement account, and that amount will increase by 1 percent each year until it reaches at least 10 percent (but not more than 15 percent). The mandatory 401(k) auto-enrollment provision will not apply to government plans like Colorado PERA.</p>



<h4 class="wp-block-heading"><strong>Student loan matching on retirement accounts</strong></h4>



<p>This provision is aimed at people who aren’t saving for retirement because they’re paying off student loans and can’t afford both. Beginning in 2024, employers will be allowed to match a worker’s student loan payments and deposit that money into their 401(k) or 457 plan account.</p>



<h4 class="wp-block-heading"><strong>Emergency savings accounts</strong></h4>



<p>Many Americans lack a dedicated savings account for emergency expenses and often end up tapping into their retirement savings to pay for unexpected costs. Under this provision, employers will be able (but not required) to automatically enroll workers in an emergency savings plan, with employees contributing no more than 3 percent of their salary on a Roth basis. The first four withdrawals from the account each year will be exempt from any fees or charges solely on the basis of such withdrawals.</p>



<h4 class="wp-block-heading"><strong>Changes to required minimum distributions (RMDs)</strong></h4>



<p>Under current law, retirees are required to start taking withdrawals (required minimum distributions, or RMDs) from retirement accounts like 401(k)s when they reach a certain age. The previous SECURE Act raised that age to 72 in 2019. SECURE 2.0 raises the age to 73 as of Jan. 1, 2023 (retirees who turned 72 in 2022 and already began taking RMDs will need to continue taking their RMDs). The RMD age will then rise to 75 in 2033. SECURE 2.0 also reduces the penalty for failing to take RMDs from 50 percent to 25 percent.</p>



<h4 class="wp-block-heading"><strong>New allowable distributions</strong></h4>



<p>Several provisions of SECURE 2.0 lay out new circumstances under which a person can withdraw money from their retirement account(s) before they’re retired without facing a penalty. The new rules allow for penalty-free withdrawals for personal or family emergencies (one distribution up to $1,000 per year), in domestic abuse cases (the lesser of $10,000, indexed for inflation, or 50 percent of the participant’s account), to pay for long-term care insurance (up to $2,500 per year) and for terminally ill patients.</p>



<h4 class="wp-block-heading"><strong>Retirement account lost-and-found</strong></h4>



<p>For workers who have held multiple jobs throughout their careers and left behind retirement accounts, it can be a challenge to find and claim those old accounts. It can be similarly difficult for plan administrators to find account holders who may have moved or changed names. This provision creates a nationwide database of retirement plans under the Department of Labor, allowing account holders to more easily find the contact information for plan administrators and claim their old accounts.</p>



<p><a href="https://www.help.senate.gov/imo/media/doc/secure_20sectionbysection.pdf" target="_blank" rel="noreferrer noopener">Click here</a> for a more detailed section-by-section explanation of each of the provisions in SECURE 2.0.</p>


What’s in SECURE 2.0?


<p>October is National Retirement Security Month — a time to examine one’s financial situation, assess progress toward retirement savings goals, make plans to get on track, or make a goal and get started.</p>



<p>Retirement security is at the core of everything we do and everything we offer at PERA. This commitment is reflected in our mission statement: To provide retirement security for our members while ensuring the sustainability of the fund.</p>



<p>In 2021, PERA paid $4.35 billion in retirement benefits to more than 110,000 Colorado retirees. Each of those retirees can rely on receiving regular income from PERA’s Defined Benefit Plan for as long as they live.</p>



<p>Some PERA employers offer a choice between the Defined Benefit (DB) Plan and the Defined Contribution (DC) Plan, and PERA members also have access to optional PERAPlus 401(k) and 457 plans to save more for retirement. Knowing what combination of plans to choose can be challenging.</p>



<p>To help members further bolster their retirement knowledge and security, PERA launched an online <a href="https://www.copera.org/financial-wellness-library?utm_source=POTI&amp;utm_medium=email&amp;utm_campaign=10-12-22" target="_blank" rel="noreferrer noopener">Financial Wellness Library</a> with a regularly updated collection of articles on retirement planning. These articles put into perspective the many factors that can impact saving for retirement, while providing suggestions that make the planning a little easier.</p>



<h4 class="wp-block-heading"><strong>Financial Wellness Library</strong></h4>



<p>The educational content in PERA’s Financial Wellness Library is split into numerous sections, including: creating a budget, investing basics, preparing for life events, protecting your assets, saving and planning, getting ready to retire, and activities in retirement as well as links to PERA benefits and tools to help you achieve your financial goals.</p>



<p>There’s also a link to additional financial wellness content from <a href="https://www.empower.com/learning_center/#/">Empower Retirement</a>, PERA’s partner in administering the PERAPlus 401(k), 457 and DC plans.</p>



<p>In addition to general financial literacy information, the library includes articles to help you get more familiar with your PERA benefits and how they can help you meet your goals:</p>



<ul>
<li><strong>Get the Most Out of PERA: View Your Member Dashboard:</strong> Learn about the features available when you log into your member account on copera.org, including checking your account balance, seeing your estimated monthly retirement benefit, submitting forms and more.</li>



<li><strong>PERA is With You Every Step of the Way Throughout Your Career: </strong>Whether you’re new to PERA or getting ready to retire, we have resources available to help you make the most of your benefits.</li>



<li><strong>The Benefits of PERA Membership Start Well Before You Retire:</strong> PERA is more than just a retirement plan; we also offer survivor and disability benefits, voluntary savings plans and more.</li>



<li><strong>Four Things New Members Should Do:</strong> If you’re new to PERA, this is a great place to start on your path to retirement security.</li>
</ul>



<p>Visit <a href="https://www.copera.org/financial-wellness-library?utm_source=POTI&amp;utm_medium=email&amp;utm_campaign=10-12-22" target="_blank" rel="noreferrer noopener">copera.org/financial-wellness-library</a> to learn more.</p>



<p><strong>Additional reading:</strong></p>



<ul>
<li><a href="https://peraontheissues.com/what-retirement-security-means-to-pera-members/" target="_blank" rel="noreferrer noopener">What ‘Retirement Security’ Means to PERA Members</a></li>



<li><a href="https://peraontheissues.com/survey-millennials-gen-x-especially-pessimistic-about-retirement-prospects/" target="_blank" rel="noreferrer noopener">Survey: Millennials, Gen X Especially Pessimistic about Retirement Prospects</a></li>



<li><a href="https://peraontheissues.com/how-retirement-systems-like-pera-plan-for-the-biggest-financial-risks-retirees-face/" target="_blank" rel="noreferrer noopener">How Retirement Systems Like PERA Plan for the Biggest Financial Risks Retirees Face</a></li>



<li><a href="https://peraontheissues.com/pera-offering-new-lifetime-income-options-to-dc-plan-participants/" target="_blank" rel="noreferrer noopener">PERA Offering New Lifetime Income Options to DC Plan Participants</a></li>
</ul>


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