The SECURE 2.0 Act of 2022 was signed into law December 29, 2022 and is designed to substantially improve retirement savings options. It builds upon the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019.
The primary objectives of this bipartisan legislation are to:
- Encourage people to save more for retirement
- Improve retirement rules
- Expand access to retirement plans and
- Lower the employer cost of setting up a retirement plan.
Secure 2.0 contains 92 provisions in total, most of which are retirement plan related. The following summary highlights several notable changes.
- The Required Minimum Distributions (RMDs) schedule is revised. The starting age is now 73. For those turning age 74 after 2032 the RMD start age is 75.
- IRA and retirement plan catch-up contributions will be indexed to inflation effective 1-1-24.
- Beginning January 1, 2024, catch-up contributions in employer sponsored plans must be designated as Roth for those with employee earnings greater than $145,000 in the prior year.
- Employer sponsored retirement plan participants ages 60-63 will have larger catch-up limits effective 1-1-25.
- The Qualified Charitable Distribution (QCD) limit of $100,000 will be indexed to inflation beginning 1-1-24.
- As part of the QCD limit, a one-time gift up to $50,000, adjusted for inflation, may be given to a charitable remainder unitrust, charitable remainder annuity trust or charitable gift annuity.
- Starting 2024, a beneficiary of a 529 college savings account can rollover funds to a Roth IRA up to an aggregate lifetime limit of $35,000.
- Starting 2024, employers have the option to “match” employee student loan payments with matching payments to a retirement account, thus giving workers an extra incentive to save for retirement while paying off educational loans.
- The Saver’s Match Program is effective in 2027 and it replaces the Saver’s Tax Credit by creating a government match regardless of tax liability. The match is contributed directly in the retirement plan or IRA account of the taxpayer. The match is 50% of the taxpayer’s contribution up to $2,000 per person and is phased out between $41,000 to $71,000 of income for joint filers and one-half that income for single filers.
FRA is active in advocating for policies and legislation that strive to improve retirement outcomes for our clients and for all members of our society. Please contact your advisor if you have questions or want to discuss how the new law may influence your personal situation or planning.