By Karen Davis, EA, MBA, PhD
The “Setting Every Community Up for Retirement Enhancement Act of 2020” (SECURE Act) made two significant retirement plan changes starting in 2020 – increasing the age for required minimum distributions from 70½ to 72, and creating a 10-year distribution rule for most beneficiaries.
A second major piece of retirement legislation, dubbed SECURE 2.0, was passed on a broadly bipartisan basis and signed into law on December 29, 2022.
SECURE 2.0 provides individual and business incentives to promote retirement savings at all stages of a worker’s life cycle, including:
- rolling over unused §529 educational savings plan balances into Roth IRAs
- expanding retirement plan eligibility to include more part-time workers
- increasing incentives for employers to establish and contribute to employee retirement plans
- automatic enrollment in employer-sponsored plans
- permitting employer matching contributions to be made with respect to employees’ student loan repayments
- increasing options for Roth components within employer-sponsored plans
- allowing greater flexibility for emergency distributions, along with an expanded timetable allowing recontribution of these distributions
- lowering the age for penalty-free withdrawals for certain qualified public safety employees
- increasing amounts for catch-up contributions in one’s early 60’s
- further delaying the age at which a person must begin taking RMDs – to 73 starting in 2023, then to age 75 a decade later
- increasing amounts within IRAs that can be allocated to qualified longevity annuity contracts.
In all, there were 92 new provisions.
