With our Tax Department working diligently towards the April deadline, we wanted to provide a brief update on recent legislation for retirement savings.
The near-unanimous vote to pass the Securing a Strong Retirement Act (referred to as the Secure Act 2.0) in the House means more changes to retirement planning could be coming. Notable among the provisions in this complex piece of legislation is an increase in the age for required minimum distributions (RMDs). Currently, RMDs begin at age 72 and under the new bill this would increase to 73 this year and scale up to 75 by 2032. The bill allows for larger catch-up contributions (up to $10,000 from $6,500) to IRAs, allowing people age 50 and older to save more as they approach retirement. Also under the legislation, employers would be able to match repayments towards student loans like they do employee contributions to 401(k) plans, and match dollar contributions made to Roth 401(k)s. Other measures include expanding automatic enrollment in 401(k) and 403(b) retirement plans and a higher limit on charitable donations allowed through IRAs.
The Senate is expected to take up the measure later this spring. While there are differences between the House and Senate versions, it seems likely that some form will ultimately pass and be signed by the President. We are keeping up with the latest provisions and will provide further updates as they emerge.