While the odds of SECURE Act 2.0 passing in 2020 is slim, it is still worth noting for 2021 as it may pass once the presidential election is finalized. As the name implies, the purpose of the proposed addition to the Act is to build on the the already previously passed SECURE Act from December 20, 2019.
“COVID-19 has only exacerbated our nation’s existing retirement crisis, further compromising Americans’ long-term financial security,” Neal said in a statement upon introducing the legislation. “With the Securing a Strong Retirement Act, Ranking Member Brady and I build on the landmark provisions in the SECURE Act and enable more workers to begin saving earlier—and saving more—for their futures.”
Here ae the items found in the proposed SECURE ACT 2.0
- Require automatic enrollment of eligible employees in 401(k), 403(b) and SIMPLE IRA plans with certain exceptions and grandfathering provisions.
- Modify the credit for small employer plan startup costs.
- Increase the amount of, and eligibility for, the “saver’s credit” for taxpayers making IRA contributions or deferral contributions to employer-sponsored retirement plans.
- Exempt up to $100,000 of accumulated retirement account balances from required minimum distribution (RMD) requirements.
- Reduce the penalty for failure to satisfy RMD requirements from 50% to 25%; if an IRA RMD failure is timely corrected, the penalty would be further reduced to 10%.
- Permit 403(b) plans to invest in collective investment trusts
- Increase the RMD age to 75.
- Provide for indexing of IRA catch-up contributions.
- Provide a second, higher tier of catch-up deferral contributions for those age 60 and older, with indexing provision.
- Allow certain student loan repayments to be paid with employer match funds.
- Provide a new small employer tax credit for enhanced plan eligibility for military spouses.
- Enhance options for correcting employee contributions.
- Permit increasing payments in IRA and defined contribution plan life annuity benefits.
- Expand the IRS retirement plan correction program to permit self-correction of certain inadvertent IRA errors.
- Permit tax-free qualified charitable contributions to be made from employer-sponsored retirement plans (now permitted only from IRAs).