Episode 182 - 3 Changes For Your Finances To Consider Under the New Secure 2.0 Act

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Ryan Burklo: Hello, everybody! Welcome back to Beer and Money. I'm. Ryan, Burklo

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Alex Collins, ChFC, CFP: and I'm. Alex. Collins.

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Ryan Burklo: and on today's episode. We're going to be talking about 3 changes for your finances to consider under the new secure 2.0 act.

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Alex Collins, ChFC, CFP: yayy legislation.

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Ryan Burklo: But before we dive into that here, Alex, what are we drinking today.

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Alex Collins, ChFC, CFP: Well, i'm i'm bummed cause again this is you drinking it because i'm still feeling a little bit under the weather. But we're drinking. Nature calls. Ipa comes from 10 barrel brewing clocks in it 6 and a half, 6 and a half percent alcohol only 40 I use.

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Alex Collins, ChFC, CFP: So so what do you think R.

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Ryan Burklo: It's. It's definitely a light.

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Ryan Burklo: Ipa.

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Ryan Burklo: It's refreshing, so it's kind of like

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Ryan Burklo: it's a great

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Ryan Burklo: beer when you when it's hot outside. I can envision drinking this and not having to worry about. Okay, if I have 2, that that's a lot of alcohol like

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Ryan Burklo: right like at 6 and a half percent alcohol. It's a it's just a drinkable beer that you can drink and not have to worry about that that aspect. It's it's not your standard northwest. Ipa, where

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Ryan Burklo: you know, after 2 beers.

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Ryan Burklo: Normally, you can be feeling that decent amount. So

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Ryan Burklo: this one is it's solid. It's a drinkable one. Let me put it that way for those of you who don't like Ipas. This might be a good starter to have. If if you look at that's all they're offering at the at the spot you're at. So, in terrible timbale brewing they make some solid bears there so definitely check them out. If I were to rate this, i'm probably giving it just because

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Ryan Burklo: the ips that you and I tend to enjoy. I'm gonna give this a 6. We tend to like the

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Ryan Burklo: the more happier ones, so i'm going to give it a 6 out of 10

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Alex Collins, ChFC, CFP: cool. Well, I look forward to

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Alex Collins, ChFC, CFP: to trying it when i'm a little bit better, and we'll have

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Alex Collins, ChFC, CFP: a rating from me coming up in a future podcast.

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Ryan Burklo: So let's talk about so so secure 2.0 act. There's there's a lot of changes, you know, for those that listen to this our episodes. They they tend to be not close to retirement or in retirement. And so we're, leaving a little bit

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Ryan Burklo: of the retirement factors out into like required minimum distributions. And that kind of fun stuff. We're going to be talking about

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Ryan Burklo: changes to consider

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Ryan Burklo: pre retirement that that might make sense for you to do, and it might be some may not even be changes.

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Ryan Burklo: You get to do it. It's changes that your employer gets to do, and maybe you get to take advantage of that.

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Ryan Burklo: And the big one in that is the the changes to 4. One. K. Alex.

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Alex Collins, ChFC, CFP: Yeah. Well, and you these are things that you might want to

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Alex Collins, ChFC, CFP: bring up with your employer and say, hey, are we going to get an opportunity to do this. That's a great point.

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Alex Collins, ChFC, CFP: Great point. So some of the changes inside of K

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Alex Collins, ChFC, CFP: are

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Alex Collins, ChFC, CFP: that there

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Alex Collins, ChFC, CFP: you you now have

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Alex Collins, ChFC, CFP: again

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Alex Collins, ChFC, CFP: assuming that the employer adopts this, the ability for the employer match

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Alex Collins, ChFC, CFP: to be Roth.

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Alex Collins, ChFC, CFP: And now you have to pay the taxes on the dollars they could put in the dollars have to be immediately vested. So there's some components there that may or may not be in your control. However.

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Alex Collins, ChFC, CFP: the ability to have

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Alex Collins, ChFC, CFP: all of the dollars that go into your 401

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Alex Collins, ChFC, CFP: be Roth, or most of the dollars that go into your K. Be Roth, depending upon some of the structure of your K is is a definite advantage in in terms of the ability to pick and choose, and how you want to go about it for your own personal situation.

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Ryan Burklo: It's a decent change, because for those of you who have the option to put in money into a Roth. K. Your employer was that if you had an employee employee match.

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Ryan Burklo: the match always went to the pre-tax side, and so now that you have the option, or the employer might

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Ryan Burklo: do the Roth match. So that's that a a definite thing to consider when we're talking about taxation over money today and in the future.

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Alex Collins, ChFC, CFP: Yeah. So there's a couple of other components that are are

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Alex Collins, ChFC, CFP: rothifying the 4. One, K. The first is.

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Alex Collins, ChFC, CFP: there's an an emergency savings component

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Alex Collins, ChFC, CFP: that can be up to $2,500 that you can have

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Alex Collins, ChFC, CFP: reduced

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Alex Collins, ChFC, CFP: barriers to access in the event of emergency.

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Alex Collins, ChFC, CFP: Now the language inside of the bill is really vague here, so you want to make sure that you're working with

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Alex Collins, ChFC, CFP: your employer. You want to make sure you're working with the 4, one K provider, your Cpa, your tax advisor to go ahead and make sure that you understand the ins and outs of of how this is going to be structured, and what what is considered an emergency. And what isn't those types of questions.

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But there's going to be more access

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Alex Collins, ChFC, CFP: inside of this specific type of structure

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Alex Collins, ChFC, CFP: for emergency access.

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Ryan Burklo: Yeah, it, you know this is I I I think you know the Go units, as Government has realized that a lot of people don't have an emergency fund set up, but they do have money in their K. So I think they're They're allowing people to kind of utilize the K.

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Ryan Burklo: A. Version of it to be an emergency fund depending on their definition of emergency. I I think that is a slippery slope. So you know, from a financial planning standpoint for those listeners here

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Ryan Burklo: like, really consider this: I would not for the most part, advise

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Ryan Burklo: you to limit

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Ryan Burklo: the amount of money you have access to in your savings account, because this new rule applies.

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Alex Collins, ChFC, CFP: but we wanted to make sure we bring it out and let you guys know about it

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Alex Collins, ChFC, CFP: truthfully, for most of our clients $2,500, which is the maximum contributions I like. This is not

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Alex Collins, ChFC, CFP: something that is going to replace emergency reserve for the vast majority of our clients.

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Alex Collins, ChFC, CFP: and the the last component of the changes to to 4. One. K. That you and I are talking about. There's there are a host of changes, and this is by no means an exhaustive list

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Alex Collins, ChFC, CFP: is that for certain folks the higher income, echelon folks.

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Alex Collins, ChFC, CFP: if you exercise the catch up contributions that are employee contributions.

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Alex Collins, ChFC, CFP: These are going to be mandatory to be Roth

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Alex Collins, ChFC, CFP: in certain circumstances.

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Ryan Burklo: Yeah. So th those are the 3 changes that we're speaking about into for for today, at least for the K.

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Ryan Burklo: Another thing. The second piece that we wanted to make sure we bring up

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is the ability to actually convert

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Ryan Burklo: any money that's in a 5 to 9 account to a Roth.

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Alex Collins, ChFC, CFP: Yeah. And so we we originally got the ability to convert traditional Iras to Roth Iras. We then got the ability to convert certain dollars inside of K's from traditional to Roth. We're now getting, albeit very limited

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Alex Collins, ChFC, CFP: ability to convert 5 to $9 into Roth. There's a lifetime cap of 35,000. You have to have the 5 to 9 plan for 15 years. There's some restrictions and some rules around distributions. But again.

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Alex Collins, ChFC, CFP: more flexibility.

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Alex Collins, ChFC, CFP: more flexibility equals better ability and better access to planning and different techniques.

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Ryan Burklo: and then number 3. They want to talk about. Here we're, we're labeling it other benefits. And and the first one is a student loan match. Right? So there's an availability for your employer to match

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Ryan Burklo: your student loans into the retirement plans. If you're putting X amount of dollars towards student loans, they will be able to match that.

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Alex Collins, ChFC, CFP: And so this is a way for employers to be able to help

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Alex Collins, ChFC, CFP: employees

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Alex Collins, ChFC, CFP: help employees by allowing the ability for employers to put dollars into a qualified retirement plan if they're paying back student loans. And so it's designed as a way to theoretically not have to choose between paying back loans and saving for retirement.

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Alex Collins, ChFC, CFP: We'll see what actually winds up coming out of this, how many employers adopt it? It's just an additional benefit now that employers can offer. Yours may or may not adopt this, and most of these rules like

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Alex Collins, ChFC, CFP: It'll be 6 months to 2 years before they're They're fully adopted, anyway, and then the last component that falls into this other benefits is the ability for both set Iras and simple Iras to also have Roths.

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Alex Collins, ChFC, CFP: And so again, it's the the further rothification of the retirement system. And again, it just provides extra flexibility where we think that this may apply for

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Alex Collins, ChFC, CFP: for you. You, our listeners, who are

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Alex Collins, ChFC, CFP: our our listenership, is, if you have a startup, and you're looking to go ahead and create a retirement plan. This now provides extra flexibility and extra choices that you can make. If you've got a spouse. There's extra choices inside of

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Alex Collins, ChFC, CFP: steps and simple structures that that you didn't have before.

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Ryan Burklo: And then last we wanted to take a quick note and just let you know that there was a lot of talk leading up to this, that that the they might change the ability or change. You know how the possibility of doing a back door. Roth Ira conversion. They did not check touch that. So it's actually still available.

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Ryan Burklo: I know many of our clients utilize that. We want to make sure that we were bringing that up for our clients as well as for any of our listeners here.

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Ryan Burklo: So those are the 3 changes that you know you should really take into consideration under the new, to secure 2 act which takes us to the question of the day outs.

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Alex Collins, ChFC, CFP: Our question today is, how can you utilize? Secure 2.0

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Alex Collins, ChFC, CFP: to your own benefit?

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Ryan Burklo: So head over to beer and money.net, and there's a spot at the top. It says, Contact us where you can either answer that question of the day, or if anything bubbled up from today's conversation that you have questions on. It's a great way to communicate with us.

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Ryan Burklo: If you got any value out of this, if you, if you were

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Ryan Burklo: didn't know about some of these changes you're like. Oh, I didn't think about that, and that that does pertain to my my personal situation. Then share it. My guess is, there's probably someone else that you know that might have similar thoughts and ideas and and questions there.

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Alex Collins, ChFC, CFP: A. As always, anything that is tax related, we're we're providing some insight and some strategies. We highly recommend that you consult your tax advisor. As this is not tax advice, and should not be relied upon as tax advice

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Ryan Burklo: 100%.

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Ryan Burklo: As always, we hope this episode was valuable for you

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Alex Collins, ChFC, CFP: and Mr. Collins cheers.

This podcast is for informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice.  Guest speakers and their firms are not affiliated with or endorsed by PAS, Guardian, or Quantified Financial Partners and opinions stated are their own.  Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. All investments and investment strategies contain risk and may lose value. This material is intended for general public use. By providing this content, Park Avenue Securities LLC is not undertaking to provide investment advice or a recommendation for any specific individual or situation, or to otherwise act in a fiduciary capacity. Please contact a financial representative for guidance and information that is specific to your individual situation.

Ryan & Alex are Registered Representatives and Financial Advisors of Park Avenue Securities LLC (PAS). OSJ: 200 Market Street Ste. 1850, Portland OR 97201 Ph 503-221-1226. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representatives of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is a wholly-owned subsidiary of Guardian. Quantified Financial Partners is not an affiliate or subsidiary of PAS or Guardian. Ryan Burklo, AR Insurance License # 15319412, CA Insurance License # 0K24924, Alexander Collins AR Insurance License # 7264699, CA Insurance License # 0H24806. #2023-149109 Exp 01/2025