On December 29th, 2022, President Joe Biden signed the $1.7 trillion omnibus spending package into law. Included in the package was the Secure 2.0 Act, which enacted several changes to the federal retirement system. Among those changes are the following:
- Increasing the age to start taking RMDs to 73 in 2023 and 75 in 2033.
- Decreasing the penalty for failing to take an RMD from 50% of the RMD amount to 25%, and 10% if immediately corrected for IRAs.
- Beginning in 2025, the catch-up contribution for those 60 to 63 years of age will increase to $10,000 for 401(k), 403(b), IRA account holders, and government plans.
- Requires businesses that offer 401(k) and 403(b) plans to auto-enroll new employees and allows employers to make matching contributions to an employee’s retirement plan based on their student loan repayments.
- Starting in 2024, the RMD requirement will be exempt from ROTH accounts in employer retirement plans.
- Retirement plans will be accessible to more part-time employees.
There may be more changes in the Secure 2.0 Act that can impact your retirement savings, and if you would like to read more about those changes, here are the bill components