07 Feb Secure 2.0 What to expect 02.07.23
SECURE 2.0: What To Expect
Institutional Investment Consultant
The Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0 became law on December 23. The Act was a combination of three separate bills meant to ease administrative burdens for employers and encourage plan sponsors to provide more achievable workplace savings strategies.
The aggregated legislation provides numerous enhancements meant to strengthen the American retirement system.
While SECURE 2.0 contains dozens of provisions, the highlights include increasing the age at which retirees must begin taking RMDs from IRA and 401(k) accounts, and changes to catch-up contributions for older workers with workplace plans. Additional changes are meant to help younger people continue saving while paying o student debt, make it easier to move accounts from employer to employer, and enable people to save for emergencies within qualified retirement accounts. A more detailed highlight list is below:
- The age to start taking RMDs increases to 73 years old in 2023 and to 75 years old in 2033.
- Starting in 2024, RMDs will no longer be required from Roth accounts in employer retirement plans.
- Employers are encouraged to adopt automatic enrollment and automatic escalation of contributions.
- Catch-up contributions may increase in 2025 for certain individuals.
- Plan sponsors can match certain qualified student loan payments.
- Defined contribution retirement plans will be able to add an emergency savings account associated with a Roth account.
- Easing of certain administrative requirements for plan sponsors.
Institutional Specialist
Some plan sponsors have already expressed concerns around the implementation of the new provisions. WealthSouth is encouraging our plan sponsors to note that most of the effective dates of the new provisions have been pushed out to 2024 at the earliest. This will give plans and sponsors adequate time to receive guidance on how these changes will be implemented within current plan designs. The Internal Revenue Service will provide guidance on the implementation of many of the provisions of SECURE 2.0 throughout the year. WealthSouth looks forward to working with you to implement these new provisions within your retirement plan as we receive further IRS guidance. In the meantime, we will continue to keep our clients updated as guidance and updated regulatory language is released.