When Congress passed the ginormous omnibus budget bill in December, it also made some pretty big changes to retirement planning.
Setting Every Community Up for Retirement Enhancement 2.0 Act of 2022 — abbreviated SECURE 2.0 because as we noted previously, the government loves abbreviations and acronyms — contains a host of incentives and new rules.
Covering all of them in one post would make the eyes of even the most die-hard retirement junkie glaze over. So, we’re just hitting some of the major highlights here. Be sure to contact us if you think your retirement planning might be affected by the new act.
The big changes include:
- An increase in the age for required minimum distributions — from 72 to 73 in 2023 and 75 in 2033
- A 25% drop in the penalty for not taking an RMD and 10% penalty if corrected in a timely manner for IRAs
- No more required RMDs from Roth 401(k) accounts in employer retirement plans starting in 2024
- A jump in catch-up contributions to up $10,000 in 2025 for certain types of retirement plans for older employees
- More penalty-free withdrawals allowed, specifically for emergency savings, domestic abuse survivors, and those who are terminally ill
- An employer match for student loan payments that helps employees who might not be able to save for retirement because of high student loan repayments.
- Tax-free rollovers from 529 college savings accounts to Roth IRAs
- Bigger tax credit for start-up retirement plans. This one is huge if you have 50 or fewer employees. You can get a credit for the full amount of the plan start-up costs along with a percentage of employer contributions for the first five years.
More questions about SECURE 2.0? Let us know.