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Have you ever wished for guidance in effectively growing your business and managing your finances? Or wonder what it takes to succeed as a female entrepreneur in finance? Then this is the podcast for you. Welcome to Women of Law, where generational wisdom meets ambition. I'm Ali Romo, your millennial host.
Allie:And I'm Hollywood's Gray, your gen x host. Using our combined backgrounds in insurance and financial services, we will share what we've learned to give you the tools you need to grow your business. Join us, and together, we will help you discover practical strategies for financial leverage, business growth, and securing your future.
Hawley:321. Hey, Wealth Warriors. Are you ready to redefine wealth and master your money mindset? Welcome to welcome to Women of Wealth. I'm your Gen X host, Hawley-Wood's Grey.
Hawley:And I'm your millennial host, Allie Ramos.
Hawley:Today, we'll be taking a look at some changes that are coming up in 2025 about your retirement and other, Secure App 2.0 initiatives that may impact you.
Hawley:So should we just start off with the obvious of, like, the retirement plans and everything that are gonna be changing?
Hawley:I think we should start with the retirement plan stuff that's changing. Great idea, Ali. So the first there's several different plans in this, Secure Act 2 point o. Some of them are a continuation from 2024 and 20 and some of them don't go into effect until much later. However, I think it's important that people understand that.
Hawley:So the first one we'll talk about is for business owners. If you're a new business or you are starting a, plan for your employees, whether that's a 401 k, a 403b, or a 457 plan, you have an opportunity to do something different. So because the Secure Act is set up so more people will save money in their retirement, they have started to change it to a automatic enroll. So if your person does not want to take advantage of that opportunity that you're offering them, they will need to opt out. So existing plans do not qualify for this or not affected.
Hawley:They're it's, like, not a grandfathered in thing or anything, but this is what, one of the changes is for the automatic enroll for new companies. Anything you wanna add there?
Hawley:And I have a question about that because I know in California, it was, you know, you have a certain amount of employees. So this is a federal mandate that's going out. And so does it matter how big the company is?
Hawley:So it will so it does depend on state by state. I think there's 28 states now that have the state mandated retirement. So, I think if you don't if you're in a state that doesn't have that, then it's gonna be 10 employees or more. Anybody who is in a state that has a mandate, then you need to follow those rules first. So always remember that you're gonna follow your state rules first and then, the federal rule will come on top of that.
Hawley:Kinda like if you're in a state where you pay income tax, then you pay your pay you usually file those at the same time. You usually, get a idea of what tech tax bracket you're in based on what state you're in.
Hawley:Yep. Yeah. Cool. And then to add on to that, as business owners, so not only are you thinking about retirement plans for your employees, but also there's the BOI filing, and that's just making sure that you file that you're the owner of your corporation. I believe this is to prevent fraud.
Hawley:I'm not really sure what, but my my accountant has told me I need to do that. And so it's a benefit beneficial ownership information report from the
Hawley:And this yes. Absolutely. And this is for the corporate trans from the corporate transparency act. So any business that has come into the effect before January 1, 2025 needs to file this. It's a, you know, they found out during COVID that a lot of businesses were fraudulently formed.
Hawley:They didn't have owners that were either alive or in the country, and so they're looking to tighten up, entities and making sure that, you know, real people own these entities and that they're not just pass through companies. So there are some exceptions. So financial services, banks, anything that has to do with money management, those are some exceptions to the rule. However, we will put in the notes of this podcast. We will put in some additional information so that you can get to the, website quickly to fill out the paperwork.
Hawley:There are a lot of companies that are are preparing this for you. You'll pay somewhere between 250 and a $1,000 depending on what company you look at, but you do need to get this form submitted, and you can do that online. You can do it yourself online. We need to do that before January 1, 2025, to avoid penalties.
Hawley:Yeah. And that penalty is actually pretty big from what I remember. So don't wait. Just file it.
Hawley:Absolutely.
Hawley:On the retirement, there's some new exciting changes for contribution limits. Holly, do you wanna share what those are?
Hawley:Sure. So for anybody who is 50 or over, you already probably know that you have a cap an opportunity to catch up. That part is not new. What is new is that if you're 60 to 63, the new catch up is giving you a little extra so that, you have additional catch up available. So for example, if you're 50 and over, you can catch up with an additional 75100 into your 403 403 b's, 457s, 401 k's, and that is something that you're able to do in the amount of 75100.
Hawley:So that would bring your total savings to 31,000 a year. For those people ages 60 to 63, you can save an additional 11,250. So your catch up amount for 2025 would be 34,750. So it's almost, increase of $4,000. So that's really helpful for people who are getting closer and closer to retirement.
Hawley:It seems like the government really wants people to start contributing to their retirement plans.
Hawley:Absolutely. And speaking about retirement plans, Allie, why don't you share a little bit about how people can convert their 5 29 plans? A little bit about what a 529 is and how they can convert that into a Roth IRA for their retirement.
Hawley:So if you're a parent, then you might have heard of a 529 because you can start saving for college, for your kiddos. And if you are a grown kid who went to college, had a 529, and maybe you've got something left over or maybe you didn't even attend college, maybe you went to vocational school, or you went straight into the workforce and didn't end up using your 529. There are some things some options that you have, for that leftover money. So option 1 would be you can, transfer that to your children and, I believe, a spouse. Correct?
Hawley:Yes. That's correct. Another family member.
Hawley:Yeah. And so the other option is if it's been in issued for 15 years, you can convert that to an IRA, Roth IRA. So unlucky for me, my dad was the owner on my 529 recently, and, you know, he's like, you're an adult. I don't know why I'm still getting your statements. Let's change the owner of it to be you.
Hawley:Okay. Great. So I signed the paperwork, and then I realized after it was all said and done that because we changed the owner, the policy had been issued a new issue date. And so now I get to wait 15 years, to move my 529 to Roth IRA. So let's learn from Ali and don't do that.
Hawley:Maybe I wonder if he could have converted it as a benefit, like, as a benefit of mine to a Roth IRA.
Hawley:Yeah. So that's really interesting because it's actually the beneficiary. So what you're gonna have to do when you have a kiddo here in the next 14 years, you're going to have to transfer it to them because you being the owner of the policy, you now are not able to roll that into a 35 up to $35,000 account. So it's only for the beneficiary of the 529, not for the owner of the 529. So and just everyone know that the Roth IRA limit, this is a lifetime limit, but you can roll it over towards a Roth IRA you might already have in effect.
Hawley:You just will have to check with your accountant and make sure that it doesn't, it doesn't I mean, it's going to count towards any annual contribution amount, so you won't be putting additional funds into that. So check with your people. Give us a call. We can help you with that as well. Another change for those of you that may already be retired is the minimum distribution age.
Hawley:Now, again, this is not an not a change for 2025 specifically, but it is a change for people who are 72 and a half to 73 and a half. So what it what it has happened is it last year, it changed from a minimum distribution age of 72, and now that's gone up to 73. So if you turn 73 in before the end of this year, depending on when your birthday was, you need to take out your minimum distribution requirements. Now have somebody who had a birthday in November, they need to take out their minimum required distribution before the end of March. And so you do have a 6 month period in there, but then they will need to now take out their next required minimum distribution before December of next year.
Hawley:So it is always December 31st of whatever year you are in that you need to take those required minimum distribution if you hit the age limits. The only thing that I will note, for those of you that are younger, like me and like Ali, the age will be going up to 75 in 2033. So I won't be at 75 yet. So I get to wait till I'm 75 to start taking out my required minimum distributions. Something to look forward to, I guess.
Hawley:Maybe some experience will change to that too, and then I'll just keep working until I'm 75.
Hawley:I'm gonna say by then, the it'll probably increase then too or maybe not. Maybe it'll be
Hawley:Oh, I'm not gonna be able to I don't have to take it till I'm 85. Okay. Great.
Hawley:Maybe we'll be in so much debt they'll be like, actually, everyone has to take it sooner.
Hawley:They might. They might do that. That could happen. Yes. I mean, it's a really great point, Ali, because, you know, one of the biggest concerns that us in the financial services industry take a look at is we take a look at that debt clock that they have for the good old USA.
Hawley:The last time the United States had a balanced budget, I was in grad school, and Bill Clinton was the president. So, we have actively been contributing to that debt ever since. And, you know, it's in the trillions now, so it's kinda scary because if our credit rating for the United States of America drops below a certain level, there's going to be places, people, and countries who will no longer lend us money anymore. So that is, you know, a concern for those of us in the financial services industry now. The good news about that is interest rates will probably go up if you're saving.
Hawley:If you're looking to buy a home, though, that's a bad thing for you. But if you're saving money, it's always good when interest rates go up. And so since we're retirement experts, it doesn't scare us that much, but it does definitely make me think about my kids and how affordable it will be for them to, you know, purchase things in the future. Cars, houses, whatever it might be, those, household items could continue to go up. You know, we we talk about inflation a lot, especially around the holidays.
Hawley:You go out there, your money doesn't go as far as it did last year or maybe the year before. So you just wanna keep an eye on those types of things because those are the things that do impact, inflation and interest rates. I know sometimes people point fingers, but it really does all come back to balancing a budget. If you don't have a balanced budget in your house, then that might be any another reason why
Hawley:you need to reach out
Hawley:to us because, if you're a financial professional or your accountant doesn't know the answers, we have experts on our team that can help you with that.
Hawley:Yes. Speaking of pointing fingers, you know, we we it's common for people to point a finger to, an administration for the economic time that we're at. But usually, it takes a few years for things to actually get enforced. And so it's usually the next administration or, you know, the next 4 years that's feeling the previous 4 years of, certain laws and things like that. But we're gonna talk about some changes to look out for in 2025 as we have a new administration coming in, and it looks like there's going to be some big shifts happening across the government.
Hawley:So, Holly, do you wanna talk about that?
Hawley:Well, yeah. I mean, one that's really important to our clients as we work with a lot of educators. Educators not only have their degree, they also have a master's typically and sometimes a PhD. And so sometimes they accumulate quite a bit of student debt. You know?
Hawley:And in the Biden administration, there were 70 several years, that the student debt was deferred. You didn't have to make payments because of COVID. And so I don't think that those deferments are going to be as friendly as they are right now going forward. I don't I think that overall, I think student loan debt, they need to have a lot changes. This is my personal opinion.
Hawley:This is not advice. This is just my personal opinion. I think that the way the student loan debt is set up, it's not set up for the student to win. I have teachers that have had the same student loan for 30 years, and they're still paying on it. And the reason why that happens is because, let's say, they did their undergrad and they had to take out a $50,000 loan for undergrad.
Hawley:They go to work for a few years. They start paying on it. They decide to get their masters. Now they're adding and tacking on another 20, 25,000 or however much that cost. So now they're pretty much still have a balance of 75,000 even though they've been deferred.
Hawley:Let's say it took them, you know, 4 or 5 years. We're now at in year 10, and now their balance has gone up, and the interest rates don't go down. And a lot of times they're just making their minimum payment, which just in in any type of debt, credit card included, if you only make the minimum payment, you're gonna have many, many years to pay those things off. Some student loans have a 3%, 6%. I've seen up to 8% interest rate.
Hawley:So if you are only making those minimum payments, that's why you might not be getting anywhere. So there are still programs available, and I believe there will continue to be programs available for those people who are public employees and they do serve, you know, the underserved. So, Ali, you wanna talk a little bit about your experience recently with that?
Hawley:Yeah. So we help clients and, you know, we've we talked with Izzy a couple weeks ago, about, helping teachers and public employees with student loans and getting those forgiven or on the path to forgiveness. And I had a client, we went through the FAFSA website. And you right now and I mean, this was also about a week ago. So things are always changing in that space.
Hawley:But we filled out a form for her to be part of the save program, and it's based on your income currently. You pay it for 10 years and then your loan is forgiven. And so her application was submitted, but there was a statement at the end of it that said, you know, we're not processing things right now. And that is something new that I hadn't seen in that I haven't seen this year. So I'm not sure if there's a freeze on the the public's, or the forgiveness programs through FAFSA, but that is something to look out for if you haven't gone through the FAFSA loan simulator, I would do that and just see what programs there they have to offer, because if there are things changing, it doesn't hurt to at least try to get in there now.
Hawley:So, we're gonna get get you guys more information about that, but, you know, keep listening. We will update you on these types of things as they change. Also, we're gonna be, releasing our YouTube channel very soon, and we will give you some more updates on videos and stuff like that. That'll be at YouTube at Wow Women of Wealth. And you can just look for me or Allie, and you'll find us, back there working working on some videos for you.
Hawley:So the last thing I wanna talk about is the, Secure Act 2.0 act that allows you to withdraw penalty free up to $1,000 from your retirement for an emergency expense. I don't know about you, Allie, but it seems like around the holidays, there are some emergencies that are unforeseen. Like, for example, you might live in a place where it snows. That snow may damage a piece of your house or a piece of your driveway. That That might be something you could take out for an emergency fund from your retirement if you needed to find a place, especially since, you know, credit card debt is at an all time high, and about 60% of people in the US have credit card debt that they are not able to pay down on a monthly basis.
Hawley:So that might be a great place for you to go. I don't know about you, but a $1,000 doesn't go as far as it used to. However, it could help, and at least it could take care of something like that. It could even possibly be a down payment for a car if you had a car situation where you needed to buy a new car by the end of the year. So, you know, it's definitely, good to make sure that you keep up on all the different changes that happen every year.
Hawley:Anything you wanna add to that, Allie?
Hawley:No. I think we I think we covered it. Yeah. It's just it's good to kinda know what's going on in the foreseeable future and how that may affect you. So we encourage you to either reach out to your accountant or your financial adviser, to get their opinion on your personal finances.
Hawley:And like Holly said, if you don't have that, we would love to connect you with one of ours. So reach out to us, and, we'll have our contact information in the email description or the podcast description.
Hawley:So one more thing I wanna talk about is from the business standpoint. We talked a lot about individual plans and what that looks like. So in the very beginning, we opened this up with, some of the Secure Act 2 point o. If you're a new company and you're starting a 401 k or a 403b or 457, that you have some automatic enrollment that's gonna start happening. That's only for new businesses and doesn't affect government entities at all.
Hawley:However, there are some some tax savings that are still available for employers that do a matching program. So, because of Secure Act 2.0, there is definitely very incentivizing ways for a business owner to start doing a matching program. So for the 1st 2 years of that program, you can get dollar for dollar tax credit. So let's say you have 10 employees, you're matching at 3%. Let's say it's $30,000 that comes out to you from each 10 employees.
Hawley:You can have a dollar for dollar write off for the 1st 2 years that you start doing that. The 3rd year, it goes down to 75% write off. The 4th year, it goes down to 50% write off. And that 5th year, it goes back to what it normally is, which it was before Secure Act 2 point o, which is that 25% write off. So it gives business owners a way to help their employees with a dollar for dollar write off that wasn't available before.
Hawley:And so I don't know how long that will continue to be available, so it might be something you want to get into so that you can get grandfathered into that. And then the last thing I wanna say is we are still accepting employee retention credit applications. We will be doing that through April. You would only be able to qualify for 2021. However, the 2021 ERC credit was much higher than 2020.
Hawley:So we definitely can give you any information you need on that, but we are still accepting applications, and I believe that we're one of the few companies that are still accepting applications. There was a moratorium put on the payment of ERC cases back in September of 2023, and it has been brought to our attention that as the year winds down, those cases are starting to get paid. We're seeing about 400 companies from, the people that we've helped start receiving money, and we have thousands and thousands of more companies that will continue to receive money. But for those of you that may have missed out on on, applying for your employee retention credit, and if you qualify either by having a reduced income in 2021 or being affected by the supply chain issues that we had or being in a state that had strict strict
Hawley:Shutdown orders?
Hawley:Thank you. That's a perfect word. Shutdown orders where, you know, you couldn't fit as many people in a restaurant because you had to sit 6 feet apart or you had to put plexiglass in there or whatever the case might be, you may qualify for it. So it's worth getting on a call with one of us or one of our teammates to find out if you qualify and, get your case in line because from what we understand, because this was a Trump initiative to begin with, we believe that I believe I won't speak for Ali, but I believe that because of that, it is something that's gonna be moving along a little bit quicker. And, also, the moratorium was set up to, get all the fraud out of the ERC payments.
Hawley:And I believe that since the payments have slowed down and they were able to, you know, find people who were not even US citizens that were trying to collect this money or prisoners trying to collect this money for a number of people. There are so many things you can Google and see. But, you know, working with a legitimate company like ours and one that has an accountant that walks through the office. I just spoke to him this morning. He's our lead accountant, and he used to be a fraud, fraud researcher for the IRS.
Hawley:So I I really believe that if you if you miss the boat on that, you might have an opportunity to jump back on here in the next couple months, get your paperwork in, and receive money. I know a lot of businesses may not have felt it in 2020, may not have felt it as much in 2021. 2022 seems like things started opening back up, but it seems like now is when we're seeing the effect of those businesses being shut down in a lot of cases. Now is when bigger businesses, like with a 150 employees, are starting to have to lay off employees because of everything that's happened. You know, it's pretty common.
Hawley:Something happens and you don't see the effects of it for 3 to 5 years. So that's all I have to say about that, but, I think this is really good to make sure that you're updated on all the changes. We do our best to update you. However, you know, you can do some goo Google searches as well to find out some of the things that we talked about today. They're they're on a lot of different websites.
Hawley:Or you can go to women of wealth dot vip if you would like to schedule an appointment with us. Again, that's women of wealth dot vip. Some of the information we covered today will be on that landing page, and there's a place there to schedule an appointment with me or Ali. So we look forward to talking to you soon. Ali, you got lot one last thought?
Allie:Merry Christmas.
Hawley:Merry Christmas.
Allie:Thank you for joining us on this week's episode.
Hawley:We'd love to hear from you, so make sure
Allie:to follow and tag us on Facebook and Instagram at women of wealth podcast. Your support means the world to us. Until next time, remember, your financial future is in your hands. Stay informed, stay inspired, and embrace your wealth. See you on the next episode.