On March 29th, the House of Representatives voted 414–5 in favor of the “Securing a Strong Retirement Act of 2022” or as it is better known, SECURE Act 2.0. Next the bill will go to the Senate and if passed will expand on the SECURE Act passed in 2019.

The first major change the SECURE Act 2.0 would initiate is to increase the Required Minimum Distribution (RMD) age from 72 currently all the way to 75 over the course of a few years, specifically the age for RMDs would be as follows:

2022–73, 2023–74, 2024–75

The second major change relates to employer sponsored retirement plans. Specifically, the bill would require 401(k) and 403(b) plans to automatically enroll their participants upon eligibility. The automatic enrollment would begin at a minimum of 3% of salary and cannot exceed 10%. This automatic enrollment would be followed by a 1% increase in participants savings rates until a ceiling of 10% was reached. As always, participants can opt out of the enrollment and certain businesses with less than 10 employees, church plans, and governmental plans will all be excluded from the requirements.

Another change the Bill would introduce specifically relates to Roth accounts. The proposed Bill would create additional opportunities for making Roth contributions by creating Roth Simple, and Roth SEP accounts which have previously not existed. Furthermore, the Bill would allow companies to make their matching contributions into Roth accounts for participants as well. Finally, the Bill would require that all “catch up” contributions be made to Roth accounts moving forward.

SECURE Act 2.0 would certainly bring some welcome changes to the retirement landscape as it adds options and creates benefits for more people saving towards retirement. However, the Bill is not passed yet and there are almost always changes from the proposed legislation to the final product so we will be keeping an eye on how it develops and will provide updates on major changes.

This content was originally published here.



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