Secure Act 2.0

Key Provisions

1. Increase Required Minimum Distributions (RMD)
   Age Increase the beginning date for RMDs from age 72 to 73 starting in 2023 and age 75 in 2033.
2. Increase Catch-Up Contributions
   Under a Retirement Plan or IRA In 2023, the retirement plan catch-up contribution limit for those over 50 is $7,500. Starting in 2025, catch-up contributions for those ages 60 to 63 will be increased to the greater of $10,000 or 50% more than the regular catch-up contribution amount in 2024. Catch-up contributions will be indexed for inflation starting after 2025. IRA catch-up contribution for an individual who attains age 50 will be indexed for inflation starting in 2024.
3. Expand Roth Contributions
   Roth contributions are now allowed for SIMPLE and SEP IRAs. Employer contributions and employee elective deferrals (if permitted) can be designated as Roth.
4. Eliminate RMDs for Roth 401(k) Accounts
   Starting in 2024, required distributions will no longer need to be taken from Roth 401(k) accounts.
5. Expand 401(k) Automatic Enrollment
   Starting in 2025, 401(k) and 403(b) plan participants are automatically
   enrolled in the plan once they are eligible to participate. Some details are:
   a. Initial contribution of at least 3% of their salary.
   b. Each year contributions would increase by 1% until a goal of 10% is
   reached, but not more than 15%.
6. Emergency Savings Account
   Beginning in 2024, employers can establish an emergency savings account
   where employees can save up to $2,500 in a Roth-style account. Distributions will be treated like a qualified distribution from a Roth account (tax-free if requirements are met).
7. Exemption from 10% Early Distribution Penalty for Withdrawals for Certain Emergency Expenses
   In case of financial hardship, up to $1,000 may be withdrawn per year, penalty free, from a 401(k) or IRA. The employee has the option to repay the distribution within 3 years. No further distributions will be permitted during the repayment period unless the distribution is paid in full.
8. Modify the Saver’s Credit
   To encourage those with low and moderate incomes, an eligible individual who makes a qualified retirement savings contribution shall be allowed a matching contribution. Starting in 2027, the government will provide 50% credit on savings up to $2,000 ($1,000 maximum credit). Credit is available regardless of whether the taxpayer has an income tax liability.
9. Student-Loan Matching Program
   Student loan payments will be treated as Employee Elective Deferral for purposes of matching contributions.
10. Increase Qualified Longevity Annuity Contract (QLAC) Contributions
    Up to $200,000 can be contributed into a qualified longevity annuity contract. The prior 25% of income limit is eliminated.
11. Reduce RMD Excise Tax
    Reduced excise tax for failure to take required distributions from 50% to 25%.
12. Expand Qualified Charitable Distributions (QCD)
    The QCD rules are expanded to allow for a one-time $50,000 distribution to a charity through a split-interest entity, including charitable gift annuities, charitable remainder unitrusts, and charitable remainder annuity trusts. Beginning in 2024, the $100,000.00 annual limit on QCDs will be indexed for inflation.
13. Annuities in 401(k) Plans
    Removal of barriers to the use of annuities in qualified plans by exempting certain annuity features from actuarial tests that would otherwise prohibit their use.
14. Retirement Savings Lost and Found
    The Labor Department will create a national online searchable lost and found database.