On March 29, 2022 the House of Representatives approved SECUR Act 2.0 formally known as The Securing a Strong Retirement Act of 2022 (H.R. 2954) which is intended to add more provisions to the original SECURE Act. The new also includes provisions from the Retirement Improvement and Savings Enhancement (RISE) Act that came out of the House Education and Labor Committee last November.
Following are the Key Provisions Found in SECURE Act 2.0
- Increased the start-up credit from 50% to 100% for costs associated with establishing a 401k plan for a small employer during the first 3 years.
- A new credit of $1,000 for employers who make employer contributions each employees 401k plan, so $1,000 per employee.
- The required minimum distribution (RMD) age is gradually increased over the next 10 years. It would increase to age 73 in 2023, to age 74 in 2030 and to age 75 in 2033.
- The 401k catch-up contribution in increased to $10,000 for participants 62-64 years of age.
- The excise tax for missed RMDs is reduced from 50 percent to 25 percent.
- Treats student loan payments as elective deferrals for purposes of making 401k contributions.
- Employees are permitted elect Roth treatment of both employee and employer contributions to SEP IRAs and SIMPLE IRAs.
- 401k catch-up contributions would have to made as Roth not pretax.
- The current three years of service period for part-time W-2 employees to be given an option to participate in a 401k plan including a solo 401k is reduced to two years.
For a section-by section summary of this bill, visit HERE.
Lastly, this SECURE 2.0 is not yet law as it also has to pass the Senate and ultimately requires President Biden’s signature. The expectation is that SECURE 2.0 will pass by the end of this spring, however.
