The latest version of SECURE Act 2.0, Securing a Strong Retirement Act of 2022, made it through the House of Representatives on March 29. Next is getting through the Senate, which is expected soon. Once it does, and after President Biden signs the bill into law, here’s what will change:
- Employees will be automatically enrolled in 401(k) and 403(b) plans, with a minimum of 3% and a max of 10%, and a 1% increase every year until it reaches 10%.
- Businesses with 10 or fewer employees, businesses under 3 years old, church plans and government plans do not have to follow these guidelines.
- Employees may opt out at any time, but the thinking is to encourage employees to save for retirement by making it an automatic deduction.
- Policies are changed for catch ups for retirement plans, student loan repayments and employer matching of retirement contributions and small employer plan start-up credits.
There’s more: the RMD—Required Minimum Distribution—age will extend further to age 73 in 2022, to age 74 in 2029 and to age 75 in 2032. People with traditional IRAs will have a longer period of time before they need to consider taking money from their retirement funds.
If you are concerned about how this bill may impact your estate and tax plan, please call our office to make an appointment.