SECURE 2.0 Act explained

The SECURE 2.0 Act of 2022,, was signed into law by President Joe Biden on December 29, 2022 as Division T of the Consolidated Appropriations Act, 2023. It builds on the changes made by the SECURE Act of 2019.^{[1] [2]} SECURE stands for Setting Every Community Up for Retirement Enhancement.^[3]

Legislative history

Richard Neal, the U.S. representative for Massachusetts's 1st congressional district and chairman of the House Ways and Means Committee, introduced the SECURE 2.0 Act as H.R.2954 on May 4, 2021. It passed the House Ways and Means Committee on May 5, 2021, and passed the full House on March 29, 2022.^[4]

On December 20, 2022, “Division T - Secure 2.0 Act of 2022” was added to H.R. 2617 (Consolidated Appropriations Act, 2023), incorporating H.R. 2954 into the omnibus bill. The omnibus bill, including Division T, passed the Senate On December 22nd, passed the House on December 23rd, and signed into law by President Joe Biden on December 29, 2022.^{[5] [6]}

Provisions

The SECURE 2.0 Act was drafted to assist in saving and investing for retirement. To that end, it contains a number of provisions to incentivize retirement planning, diversify the options available to savers, and increase access to tax-advantaged savings programs. Several of these provisions do not take effect until later year. Some of the provisions are listed here^{[7] [8]}

• Expands automatic enrollment for firm retirement plans
• Creates a “saver's match”, a federal tax credit which can be claimed by a taxpayer for contributing to an employer retirement plan
• Increases age at which required minimum distributions start
• Indexes catch-up contributions to inflation
• Allows employers to provide incentives (like payments or gift cards) to employees to join a plan
• Changes coverage requirements for part-time employees
• Allows Tax-Free Rollovers of 529s to ROTH IRAs under certain circumstances
• Creates several exemptions for early withdrawals, including
  • Withdrawals for emergencies
  • Withdrawals by domestic abuse victims
  • Withdrawals by plan participant with terminal illness
  • Withdrawals relating to disaster
  • Corrective distributions for excess contribution
• Calls for establishment of a Retirement plan "lost and found"
• Allows ROTH contributions to SIMPLE and SEP IRAs
• Allows participant to designate employer matching contributions as ROTH

Notes and References

1. Web site: 401(k) Savings Plans Get a Boost in Bipartisan Retirement Bill - WSJ .
2. Web site: Actions - H.R.2617 - 117th Congress (2021-2022): Consolidated Appropriations Act, 2023 | Congress.gov | Library of Congress.
3. Web site: Overview of SECURE 2.0 Act: Key Provisions for Retirement Plans . 2024-10-28 . natlawreview.com . en.
4. Web site: Actions - H.R.2954 - 117th Congress (2021-2022): Securing a Strong Retirement Act of 2021 | Congress.gov | Library of Congress.
5. Web site: S.Amdt.6552 to H.R.2617 - 117th Congress (2021-2022) | Congress.gov | Library of Congress.
6. Web site: Secure 2.0 Act: A Timeline. Melanie. Waddell. ThinkAdvisor.
7. Web site: Key tax and retirement provisions in the Secure 2.0 Act. January 4, 2023. Journal of Accountancy.
8. Web site: Key tax and retirement provisions in the Secure 2.0 Act. January 4, 2023. The Tax Adviser.