On the heels of Congress's 2019 "Setting Every Community Up for Retirement Enhancement Act" (the "SECURE Act"), new retirement legislation informally dubbed "SECURE Act 2.0" is currently awaiting Congressional approval. SECURE Act 2.0 consists of two significant legislative proposals that focus on enhancing retirement plan access and administration—the House's Securing a Strong Retirement Act of 2021 and the Senate's Retirement Security and Savings Act of 2021. The Securing a Strong Retirement Act passed the House Ways and Means Committee by a unanimous vote on May 5, 2021. The Retirement Security and Savings Act was reintroduced in the Senate a couple of weeks later. Based on strong bipartisan support, it is widely believed that SECURE Act 2.0 will become law in the coming months.
The proposed legislation includes the following key retirement plan changes:
- Increases the small employer pension plan start up credit to cover 100% of the cost to small employers to implement a 401(k) plan for the first three years.
- Creates a new credit to encourage small employers to make employer contributions ($1,000 per employee).
- Expands automatic enrollment by requiring new defined contribution plans to implement automatic enrollment.
- Increases the required minimum distribution age from 72 to 73 starting in 2022, 74 starting in 2029, and 75 starting in 2032.
- Increases the annual catch up limit from $6,500 to $10,000 for ages 62 to 64.
- Subjects all catch up contributions to Roth tax treatment.
- Permits employees to elect Roth tax treatment for matching contributions.
- Permits matching contributions based on employees' student loan repayments.
- Allows 403(b) plans to utilize collective investment trusts.
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