Last week, on May 5, the House Ways and Means Committee sent the Securing a Strong Retirement Act of 2021, “SECURE Act 2.0,” to the House for consideration. Here are some of the more significant changes that the bill as currently drafted would bring to the retirement landscape:
Raises the minimum distribution age. After being based on attainment of age 70½ for decades, the Act would raise the required minimum distribution (“RMD”) age once again over several years. The SECURE Act 1.0 raised the RMD to age 72. If passed, SECURE Act 2.0 would continue the raise in the RMD age to 73 in 2022, 74 in 2029, and 75 in 2032.
Increases and “Roth-ifies” catch-up contributions. The limit on 401(k) catch-up contributions for 2021 is $6,500, indexed annually for inflation. The proposed provisions would keep the catch-up age at 50 but increase the limit by an additional $10,000 per year for employees at ages 62, 63, and 64. The Act also provides that effective in 2022, catch-up contri
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On May 5, 2021, the Ways and Means Committee in the U.S. House of Representatives showed a rare sign of bipartisanship by unanimously passing the Securing a Strong Retirement Act of 2021 – more commonly known as SECURE 2.0. The bill builds on a number of items that were included in the SECURE Act that passed in late 2019 and also includes many new retirement plan features. While a number of similar bills have been proposed since the original SECURE Act was passed, the fact that this bill unanimously passed committee is a good indicator that this one has legs.
What You Need to Know
Secure 2.0 increases the RMD age to 73 starting on Jan. 1, 2022, to 74 starting on Jan. 1, 2029, and to 75 starting on Jan. 1, 2032.
According to IRS data, 80% of people who take the RMD amount or more do so because they need the money, says retirement expert Ed Slott.
The Federal Reserve says the average 64-74 year old has $358,000 saved for retirement, with the median amount at $126,000.
The House Ways and Means Committee’s recent passage of the Securing a Strong Retirement Act of 2021, dubbed the Secure Act 2.0, has spurred rounds of applause in the retirement planning community, but some provisions have left advisors scratching their heads.
New Retirement Bill Would Help Savers of All Ages
New Retirement Bill Would Help Savers of All Ages
With bipartisan support, this bill could help millions of workers and retirees boost or conserve their retirement savings.
Photo by Spotmatik Ltd / Shutterstock.com
Americans may soon enjoy greater access to retirement plans and could be able to delay withdrawing their savings, thanks to new legislation advancing through Congress.
“We are now one step closer to improving Americans’ financial security, and hope to see this measure move through Congress and be signed into law in short order,” committee Chairman Richard Neal (D-Mass.) and ranking member Kevin Brady (R-Texas) said after the committee passed the bill last week.
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DOL Rescinds Independent Contractor Rule. On May 6, 2021, the U.S. Department of Labor (DOL) issued a regulation rescinding its independent contractor rule, which was finalized on January 7, 2021, but never went into effect. The withdrawal comes less than three weeks after the close of a public comment docket that generated over 1,000 responses. The DOL stated that it “believes that the Rule is inconsistent with the [Fair Labor Standards Act’s] text and purpose, and would have a confusing and disruptive effect on workers and businesses alike due to its departure from longstanding judicial precedent.” The new regulation does not set forth a new regulatory standard for evaluating independent contractor status, but the