Dec 29, 2022 - Overview of the long-awaited SECURE Act 2.0 making its way into law
The long-awaited SECURE Act 2.0 has passed through Congress and now awaits President Biden’s signature. This is a large and impactful piece of legislation that will include 92 retirement-related provisions that expand the initial SECURE Act that passed in 2019.
Thankfully, few of these provisions will call for urgent, last-minute, year-end planning; and many are potentially advantageous. Here are some of the most impactful provisions below:
- The Required Minimum Distribution (RMD) age will gradually increase to 75; currently, RMDs must generally start at age 72
- Part-time employees with two consecutive years of over 500 hours must be eligible to participate in company-sponsored plans
- The catch-up contribution for participants 60, 61, and 62 years old will increase to $10,000 indexed for inflation
- A new student-loan matching program is created to treat student loan payments as plan contributions for purposes of matching contributions
- New startup plans will be required to have a mandatory automatic enrollment of 3% with annual increases of 1% up to at least 10% (maximum 15%)
- Starter 401(k) plans for employers with no retirement plan: An employer that does not sponsor a retirement plan will be permitted to offer a new starter 401(k) plan which will generally require that all employees be default enrolled in the plan at a 3% to 15% deferral rate
- A Retirement Savings Lost and Found is established
- A Saver’s match is enhanced that will modify the existing Saver’s Credit with respect to IRA and retirement plan contributions by changing it from a credit paid in cash as part of a tax refund to a government-matching contribution that must be deposited into a taxpayer’s IRA or retirement plan
These highlights just scratch the surface of this broad legislation. That’s why we are here – to help you navigate the implications for your specific circumstances, and to ensure that we take full advantage of any applicable opportunities.
As always, we will actively identify how these changes impact your specific circumstances, and we will be in touch to discuss your potential options. In the meantime, please call us if you have questions. We look forward to serving you.