“SECURE 2.0” Bill Passed in House

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The U.S. House of Representatives recently passed the Securing a Strong Retirement Act of 2022 bill. The act is often referred to as “SECURE 2.0” because it builds upon the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019.

Some of the key SECURE 2.0 proposals include:

• Permitting employees to elect some or all of their matching contributions to be treated as Roth contributions for 401(k) plans. Employer contributions would not be excluded from employees’ gross income.
• Existing catch-up contribution limits (for a 401(k) or similar plan) stay the same for those who are aged 50 but the bill increases the annual catch-up amount for those ages 62-64 to $10,000 starting in 2023. All contributions would be designated Roth contributions.
• Employers with defined contribution plans would be required to automatically enroll new eligible employees. They would be enrolled at a pretax contribution level of 3% of their salary. Levels would increase by 1% up to at least 10% but no more than 15% of employee’s pay. Employees can elect a different contribution.
• Employers can make 401(k) matching contributions based on employees’ student loan payments (even if the employee isn’t making retirement contributions). This will help many save for retirement while continuing to pay down their debt.
• Modifying the credit for small employer pension plan startup costs
• Increasing the age for required minimum distribution
• Establishing a national, online Retirement Savings Lost & Found Data for workers and retirees to find their lost retirement accounts
• Improving coverage for part-time workers in 401(k) plans by reducing years of service requirements

Note that this bill still has several steps to go through the legislation process. Changes to the bill may occur along the way. Stay tuned to our blog for the latest updates.

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