On March 29, 2022, the U.S. House of Representatives passed the Securing a Strong Retirement Act of 2022 by a strong bi-partisan vote of 414-5.1  The measure is commonly referred to as the SECURE Act 2.0 because it is a follow-up to the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, which first made sweeping changes to retirement savings plans.

Following are some highlights of the bill that passed the House and features of the Senate version currently in review2 :

  • The age when required minimum distributions (RMDs) begin will be pushed back from the current age of 72 to 73 in 2023, age 74 in 2030, and age 75 in 2033. In addition to what is outlined in the House bill, the Senate’s version allows individuals with less than $100,000 in aggregate retirement savings to be exempt from an RMD.
  • Additional catch-up contributions to 401(k) and 403(b) plans will be expanded to $10,000 (from the current $6,500) for individuals ages 62, 63, or 64 beginning in 2024, while changing the nature of all catch-up contributions to be treated as Roth (after-tax) contributions. The Senate’s version allows those age 60 or older to qualify for the expanded $10,000 limit.
  • Employers will be required to auto-enroll employees in their 401(k) plan at rate of at least 3% with an increase of 1% each year until reaching 10%. Employees will be allowed to opt out of the auto enrollment.
  • Employees can elect to have employer retirement matching contributions be made to Roth (after-tax) accounts. Currently, employer contributions must be made on a pre-tax basis.
  • Employers can make matching retirement plan contributions based on an employee’s student loan repayments.

The Senate is expected to take up its version of the bill soon, and, based on strong bi-partisan support, a final version is fully expected to be on President Biden’s desk before the end of 2022.

CCM’s Tax Team will continue to monitor developments on the bill and provide updates as applicable. In the meantime, if you have any questions about how this bill could impact your retirement strategy, please contact your CCM advisor and we will be happy to review your plan.

  1. https://www.forbes.com/advisor/retirement/secure-act-2-retirement/
  2. The Securing Strong Retirement Act, H.R. 2954

NOTE: The information provided in this article is intended for clients of Carlson Capital Management. We recommend that individuals consult with a professional adviser familiar with their particular situation for advice concerning specific investment, accounting, tax, and legal matters before taking any action.