SECURE Act 2.0

Bert Languet, CFP®

July 08, 2021

In the past two years there have been several pieces of legislation that affect your retirement including the SECURE Act of 2019 and the CARES Act of 2020. We have written about these previous two changes and now we are evaluating the SECURE Act 2.0 which was approved by the House Ways and Means Committee back in May and awaits passage by the full House. Officially the bill is called the Securing a Strong Retirement Act of 2021.

If passed, the Act will make the following changes to name a few:

It would increase the age to begin RMDs (Required Minimum Distributions) to age 75 from age 72 that the SECURE Act of 2019 raised from 70 ½.
It would raise the catch-up provisions for those age 62, 63, and 64. Currently there are increased amounts for those over 50.
- 401(k) and 403(b) plans - an additional $10,000 per year
- SIMPLE Plans – an additional $5000 per year
- IRAs would stay with the $1000 catch-up limit, but would index for inflation.
Allow companies to make 401(k) matching contributions based upon student loan payments even if the employee is not making contributions themselves. This would help employees who cannot afford to make contributions while paying down student loans by allowing employers to make contributions based upon a partial match of those loan payments.
Expand after-tax contributions to Roth accounts. Under current law, SEP and SIMPLE retirement plans cannot have a designated Roth IRA account. The Secure Act 2.0 would allow these to be included.
Increase Qualified Charitable Distributions (QCD) to $130,000 from the current $100,000 for those age 70 ½ or older.

There are many other proposed changes that will come along with this bill. Remember that it has not been signed into law yet. We will let you know once the legislation passes and if there are any relevant changes to your plans.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

SECURE Act 2.0

If passed, the Act will make the following changes to name a few:

It would increase the age to begin RMDs (Required Minimum Distributions) to age 75 from age 72 that the SECURE Act of 2019 raised from 70 ½.

It would raise the catch-up provisions for those age 62, 63, and 64. Currently there are increased amounts for those over 50.

401(k) and 403(b) plans - an additional $10,000 per year

SIMPLE Plans – an additional $5000 per year

IRAs would stay with the $1000 catch-up limit, but would index for inflation.

Expand after-tax contributions to Roth accounts. Under current law, SEP and SIMPLE retirement plans cannot have a designated Roth IRA account. The Secure Act 2.0 would allow these to be included.

Increase Qualified Charitable Distributions (QCD) to $130,000 from the current $100,000 for those age 70 ½ or older.

There are many other proposed changes that will come along with this bill. Remember that it has not been signed into law yet. We will let you know once the legislation passes and if there are any relevant changes to your plans.