Three years after the SECURE Act of 2019 ushered in the first major changes to the U.S. retirement system in more than a decade, more modifications are now on their way.
Dozen of retirement-related provisions collectively known as “SECURE 2.0” are included in a $1.7 trillion bill that received approval from the House of Representatives on Friday, following approval from the Senate on Thursday. It is now headed to President Joe Biden’s desk, poised to be signed into law.
The bill builds on earlier legislation that increased the age at which retirees must take required minimum distributions (RMDs) and allowed workplace saving plans to offer annuities, capping years of discussions aimed at bolstering retirement savings through employer plans and IRAs.
While SECURE 2.0 contains dozens of provisions, the highlights for people in or near retirement include:
- Increasing the age at which retirees must begin taking RMDs from IRA and 401(k) accounts to 73 in 2023 and 75 in 2033.
- The penalty for failing to take an RMD will decrease to 25% of the RMD amount, from 50% currently, and 10% if corrected in a timely manner for IRAs.
- Starting in 2024, RMDs will no longer be required from Roth accounts in employer retirement plans.
- Catch-up contributions will increase in 2025 for 401(k), 403(b), governmental plans and IRA account holders.
- Defined contribution retirement plans will be able to add an emergency savings account associated with a Roth account.
Related: What The SECURE Act 2.0 Could Mean for Your Retirement Savings
Additional changes are meant to help younger people continue saving while paying off student debt, making it easier to move accounts from employer to employer, and allowing people to save for emergencies within retirement accounts.
Get instructions on how to enable our Flash News Briefing skill to your Amazon devices: