The House is scheduled to vote tomorrow on the Securing a Strong Retirement Act (SECURE 2.0), which would increase both the age that investors must start required minimum distributions (RMDs) and the catch-up amounts that older investors can sock away in IRAs.

The bill would increase the RMD age to 73, 74 or 75, depending on when an investor turns age 73. For instance, for those who turn age 73 after December 31, 2023, and before January 17, 2030, the RMD age is 73.

For those who turn age 74 before January 1, 2033, the RMD age is 74 and for those who turn age 74 after December 31, 2032, the applicable RMD age is 75, according to the bill.

Sponsored by House Ways & Means Committee Chairman Richard Neal (D-Mass.) and Ranking Member Kevin Brady (R-Texas), the bill seeks to expand retirement coverage and simplify and encourage the creation of retirement plans by businesses.

SECURE 2.0 would also create richer catch-up contribution limits, hiking the catch-up limit to $10,000 for IRAs and $5,000 for SIMPLE IRA beginning in tax year 2022 for those who attain age 62 before the close of the taxable year.

In a nod to the effectiveness of the insurance industry’s lobbying ability, the bill would remove the required minimum distribution requirements for life annuities and allow plans to invest in qualifying longevity annuity contracts and insurance-dedicated exchange-traded funds.

The bill also expands automatic enrollment in 401(k) plans by requiring 401(k), 403(b) and SIMPLE plans to automatically enroll participants in the plans upon becoming eligible, with the ability for employees to opt out of coverage. 

House Majority Leader Steny Hoyer (D-Md.) said in a letter to colleagues March 25 that “expanding automatic enrollment in employer provided retirement plans, simplifying rules for small businesses, and helping those near retirement save more for longer, this legislation will help increase Americans’ access to retirement funds and help families save for the future.”

If passed, SECURE 2.0 would also allow employers to fund long-term part-time employees’ retirement plans by reducing qualification from 500 hours over three years to two years and allow employers to create student loan matching programs.

Under SECURE 2.0, repayment of qualified birth or adoption distributions would be limited to three years. It also would impose a three-year limitation on recontributions.
SECURE 2.0 was approved by the House Ways and Means Committee in May 2021 by a unanimous, bipartisan voice vote.
 
The SECURE Act 2.0 bill as written would also do the following:

• Increase the startup credits for small employer pension plan credit to cover 100% of the cost to small employers to implement a plan for the first three years.
• Create an additional credit to encourage small employers to make direct contributions to their 401(k) plans that can offset up to $1,000 of employer contributions for each participating employee. .
• Broaden the SECURE Act’s pooled employer or open multiple employer plans (MEP) to allow unrelated public education and other non-profit employers to join a single 403(b) plan.