It seems like every time you turn around, there are a new set of rules you need to remember for some part of your life. From health care to taxes to retirement, there are so many rules it can make dismantling a bomb sound easy. Should you cut the red wire or the blue wire? Two options, simple, right? OK, maybe that is a tad dramatic as far as examples go, but the bottom line is that managing all this information can be complicated, and as soon as you think you’ve got it all down, BOOM, the rules change.
Where am I going with this, you ask? The SECURE Act 2.0. I would ask if you remember the first SECURE Act, but there hasn’t been enough time to forget it yet - it was just passed in 2019. In case you forgot the specifics, here’s a quick refresher.
The Setting Every Community Up for Retirement Enhancement Act of 2019, better known as the SECURE Act, was originally passed as part of an end-of-year appropriations act and accompanying tax measure by former President Donald Trump. The far-reaching bill included significant provisions aimed at increasing access to tax-advantaged accounts and preventing older Americans from outliving their assets.1
The highlights from the first act include:
- Making part-time workers eligible to participate in an employer retirement plan.
- Pushing back the age at which retirement plan participants need to take required minimum distributions (RMDs) from 70½ to 72 and allowing traditional IRA owners to keep making contributions indefinitely.
- Mandating most non-spouses who inherit IRAs to take distributions emptying the account within ten years.
- Allowing 401(k) plans to offer annuities.
At the end of 2022, Congress passed an updated version of the SECURE Act, which has new and expanded changes that will further help Americans save money, especially for retirement.
Here’s the highlight reel from the new Act:2
- The Act contains 92 new provisions to promote savings, boost incentives for businesses, and offer more flexibility to those saving for retirement.
- Provisions include automatic 401(k) enrollment, an increase in the age for taking RMDs, significant tax benefits for employers, and much more.
And perhaps the most shocking part of all - the legislation in both chambers enjoyed broad bipartisan support.
In this month’s blog series, I’ll unpack SECURE Act 2.0 for you and let you know what areas may affect you the most so you can take advantage of increased savings opportunities because we can all benefit from those!
Until next time…
One last thought, I believe an educated investor is an empowered investor. If you like what you’ve read and think your friends and family can benefit as well, please share.
1 Congress.gov. "H.R.1994 - Setting Every Community Up for Retirement Enhancement Act of 2019."
2U.S. Congress. "H.R.2617 - Consolidated Appropriations Act, 2023."
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