1010 B Street
November 23, 2021
When the Setting Every Community Up for Retirement Enhancement (SECURE) Act became law on January 1, 2020, it altered rules for retirement accounts with a goal of helping both retirees and pre-retirees. More rule changes might be ahead, because a legislative sequel, known popularly as SECURE Act 2.0, is now proceeding through Congress.
The SECURE Act 2.0 would give retirement savers aged 62-64 the chance to make much larger "catch-up" contributions to common workplace retirement plans, starting in 2023. During those three years, they could make their standard yearly catch-up contribution, plus an additional yearly catch-up contribution of up to $10,000. Businesses that sponsor such defined-contribution plans would have to automatically enroll eligible employees at a base 3% contribution rate, which would rise 1% a year to a ceiling of 15% unless workers choose to fund their accounts differently. Some retirement accounts have required minimum distributions (RMDs) starting at age 72; the SECURE Act 2.0 would gradually reset that RMD threshold to age 75 during 2022-2032, potentially allowing more compounding for retirement accounts. In addition, the menu of investments in retirement plans could potentially include income contracts, and plans sponsored by non-profits could become more like the ones sponsored by for-profit businesses.1