Secure Act 2.0

Common Provisions

– Matching contributions on student loan payments

– Domestic abuse withdrawals

– Lower eligibility requirements for long-term part-time employees to two consecutive years of service with 500 hours.

– Defined contribution plans are not required to provide notices to unenrolled participants.

– Matching contributions may be in the form of a Roth contribution.

– Repayment period for qualified birth or adoption distributions limited to three years.

– Plans may provide small incentives to participate.

Higher catch-up contributions after age 60

• Increase catch-up to $10,000 (indexed).
• Available age 62 – 64 under SSRA
• Available age 60 – 63 under EARN

Required minimum distribution (RMD) changes

• Increase RMD beginning age to 75.
  • Age 73 in in 2023, age 74 in 2030 and age 75 in 2033 under SSRA
  • Age 75 in 2032 under EARN
• Reduce penalty for failure to take a RMD to 25% (currently 50%).
• EARN would exempt all Roth sources from RMD requirement.

Require catch-up contributions be in the form of a Roth contribution

• Effective in 2023 under SSRA, effective 2024 under EARN.
• Under EARN, Roth requirement would only apply if income exceed a certain level.

Increase start-up credit for small employers (100 or fewer employees)

• Currently a three-year credit equal to lesser of 50% of start-up costs or $5,000
• EARN would increase to 75% for employers with 25 or fewer employees.
• SSRA would increase to 100% for employers with 50 or fewer employees.

Qualified longevity annuity contract (QLAC) reforms

• Currently premiums limited to lesser of 25% of account balance or $145,000
• Both SSRA and EARN would repeal the 25% limit.
• EARN would increase the $145,000 to $200,000.

Increase cash-out limits (currently $5,000)

• EARN would increase to $6,000.
• SSRA and RISE & SHINE would increase to $7,000.

Saver’s Credit Reforms

• Under SSRA, credit would be equal to 50% of first $2,000 in retirement contributions for joint filers earning $48,000 or less(phases out over next $35,000 of income).
• Under EARN, credit would be equal to 50% of first $2,000 in retirement contributions for joint filers earning $41,000 or less(phases out over next $30,000 of income).
• EARN would make the saver’s credit refundable.
  • Must be paid to a plan or IRA. Plans would not be required to accept.
  • Refund is not taxable and is not include for discrimination testing or limits on contributions.

Retirement Savings Lost and Found

• Both SSRA and EARN create a registry to assist workers in finding lost retirement savings.
• For unresponsive participants, EARN would require transferring balances of $1,000 or less to a lost-and-found account held at the Treasury.