Back in 2019, the Congress passed Setting Every Community Up for Retirement Enhancement (or SECURE) Act.
Some of the changes that went into effect on January 1, 2020 as a result of the passage of the SECURE Act included:
- Increasing the age at which Americans must take required minimum distributions (RMDs) from their qualified retirement plans (from 70 ½ to 72)
- Eliminating the maximum age restriction on making contributions to traditional IRAs
- Abolishing the “stretch” IRA
- Allowing part-time employees to participate in company-sponsored retirement plans
At that time, financial experts said that there would likely be more changes to retirement down the road. Well, that time has arrived. The new bill is called Securing a Strong Retirement Act of 2020 (or SECURE 2.0) and was introduced to Congress in October 2020.
While there will no doubt be changes made to the original proposal, many retirement plan industry insiders believe there is a good chance that SECURE 2.0 will be passed, since these kinds of bills tend to garner support from both sides of the aisle in Congress.
So, what does SECURE 2.0 look like? Here are some of the major proposals (as they now stand) that are of interest to older Americans:
- The minimum age for RMDs would again be increased, this time from 72 to 75
- Any retiree with less than $100,000 in their qualified plan would be exempt from taking an annual RMD
- For workers over age 60, the maximum amount of annual catch-up contributions to qualified retirement plans would be increased (from $6,500 to $10,000 for those with a 401(k) or 403(b) plan and from $3,000 to $5,000 for those with a SIMPLE IRA)
- The maximum amount of qualified charitable donations (or QCDs) from IRAs would be increased to $130,000 per year from the current $100,000 per year
The House Ways and Means Committee is expected to vote on SECURE 2.0 in the next few weeks (interestingly, both the U.S. Chamber of Commerce and AARP have endorsed it).
If and when the bill passes, it’s a good idea to meet with your financial advisor to discuss how these new provisions might affect your plans for retirement. If you don’t want to wait until the SECURE 2.0 bill is approved, you can always sign up for a free, no-obligation consultation with one of our advisors now. Just click here to make your appointment.