The House released its own version of SECURE Act 2.0 (The Securing a Strong Retirement Act of 2022 (H.R. 2954))this past March. On June 17, it was the Senate’s turn. The Senate Finance Committee has released an outline of its version of proposed SECURE Act 2.0- Enhancing American Retirement Now (EARN) Act.
Following are Some of the Key Provisions Found in the Proposed EARN Act That Would Impact Solo 401k Plans
- Allow for hardship distributions for emergencies;
- providing permanent rules relating to the use of retirement funds in the case of disaster;
- enhanced tax credits for the cost of new plans;
- Require Treasury to simplify and standardize the rollover process by issuing sample forms for direct rollovers that may be used by both the incoming and outgoing retirement plan or IRA.
- treating student loan payments as elective deferrals for purposes of matching contributions;
- allowing higher catch-up limits after age 60 [specifically, allowing participants to elect to contribute an additional $10,000 (indexed) annually beginning between age 60 and 63, effective after 2023];
- waiving the 10% additional tax that applies to early distributions from tax-preferred retirement accounts (e.g., solo 401(k) plans and IRAs) in the case of eligible distributions to domestic abuse victims;
- increasing the age for required beginning date for mandatory distributions;
What Happens Next
Both bills (House & Senate) are expected to pass later this year. They will then be combined and vote on most likely after the November elections.