SECURE 2.0 Act
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| Acronyms (colloquial) | SECURE 2.0 Act |
|---|---|
| Nicknames | SECURE 2.0 Act |
| Citations | |
| Public law | Pub. L. 117–328 (text) (PDF), Division T |
| Codification | |
| Acts affected | Internal Revenue Code of 1986; Employee Retirement Income Security Act of 1974 |
| Agencies affected | Internal Revenue Service; United States Department of Labor; United States Department of the Treasury |
| Legislative history | |
| |
The SECURE 2.0 Act of 2022, was signed into law by President Joe Biden on December 29, 2022 as Division T of the Consolidated Appropriations Act, 2023. It builds on the changes made by the SECURE Act of 2019.[1][2] SECURE stands for Setting Every Community Up for Retirement Enhancement.[3]
Legislative history
[edit]Richard Neal, the U.S. representative for Massachusetts's 1st congressional district and chairman of the House Ways and Means Committee, introduced the SECURE 2.0 Act as H.R.2954 on May 4, 2021. It passed the House Ways and Means Committee on May 5, 2021, and passed the full House on March 29, 2022.[4]
On December 20, 2022, “Division T - Secure 2.0 Act of 2022” was added to H.R. 2617 (Consolidated Appropriations Act, 2023), incorporating H.R. 2954 into the omnibus bill. The omnibus bill, including Division T, passed the Senate On December 22nd, passed the House on December 23rd, and signed into law by President Joe Biden on December 29, 2022.[5][6]
Provisions
[edit]The SECURE 2.0 Act was drafted to assist in saving and investing for retirement. To that end, it contains a number of provisions to incentivize retirement planning, diversify the options available to savers, and increase access to tax-advantaged savings programs. Several of these provisions do not take effect until later years. Some of the provisions are:[7][8]
- Expands automatic enrollment for certain retirement plans[9]
- Creates a "saver's match", a federal tax credit which can be claimed by a taxpayer for contributing to an employer retirement plan.
- Increases age at which required minimum distributions start.[10]
- If a plan participant turns 73 in 2024 or later, required minimum distributions must begin at age 73.
- If a plan participant turns 73 before 2024, required minimum distributions must begin at age 72.
- Catch-up contributions limits are now indexed to inflation.
- Allows additional catch-up contributions for participants aged 60 to 63.[9]
- Allows employers to provide incentives, such as like payments or gift cards, to employees to join a retirement plan.
- Changes coverage requirements for part-time employees.[9]
- Allows tax-free rollovers of 529 plans to Roth IRAs under certain circumstances.
- Creates several exemptions for early withdrawals, including:
- Calls for establishment of a retirement plan "lost and found".
- Allows Roth contributions to SIMPLE and SEP IRAs.
- Allows participant to designate employer matching contributions as Roth contributions.
- Allows employers to make matching retirement contributions based on employee student loan payments.[15]
Notes
[edit]- ^ For these purposes, an emergency personal expense meets an unforeseeable or immediate financial need relating to necessary personal or family emergency expenses. A limit of one such distribution per calendar year is allowed to be treated as an emergency personal expense distribution by an individual. An emergency personal expense distribution is limited to $1,000 per calendar year. Subsequent emergency personal expense distributions are limited.[11]
- ^ For these purposes, domestic abuse is defined as physical, psychological, sexual, emotional, or economic abuse. It may include efforts to control, isolate, humiliate, or intimidate the victim. It may also include efforts to undermine the victim's ability to reason independently, such as means of abuse of the victim's child or another family member living in the household. An individual is allowed to self-certify that they are a victim of domestic abuse in order to qualify for a withdrawal. A withdrawal by a domestic abuse victim is limited to the lesser of 50 percent of the account's balance or $10,000, indexed for inflation. A domestic abuse victim may opt to repay the withdrawal to the same account or a similar account over a three-year period. If they do so, income taxes on the amount of the repayment will be refunded to the individual.[12]
- ^ For these purposes, a terminal illness is a participant's illness or physical condition that is reasonably expected to result in death within 84 months of the medical provider's certification.[13]
- ^ For these purposes, a qualified disaster is any disaster declared by the U.S. president as a major disaster after December 27, 2020. An individual whose principal residence is located in the qualified disaster area during the incident period and experiences an economic loss as a result of the qualified disaster may make a withdrawal related to the disaster.[14]
References
[edit]- ^ "401(k) Savings Plans Get a Boost in Bipartisan Retirement Bill - WSJ". Archived from the original on 2022-03-31. Retrieved 2024-11-15.
{{cite web}}: CS1 maint: bot: original URL status unknown (link) - ^ Rep. Connolly, Gerald E. [D-VA-11 (December 29, 2022). "Actions - H.R.2617 - 117th Congress (2021-2022): Consolidated Appropriations Act, 2023". www.congress.gov.
{{cite web}}: CS1 maint: numeric names: authors list (link) - ^ "Overview of SECURE 2.0 Act: Key Provisions for Retirement Plans". natlawreview.com. Retrieved 2024-10-28.
- ^ Rep. Neal, Richard E. [D-MA-1 (March 30, 2022). "Actions - H.R.2954 - 117th Congress (2021-2022): Securing a Strong Retirement Act of 2021". www.congress.gov.
{{cite web}}: CS1 maint: numeric names: authors list (link) - ^ "S.Amdt.6552 to H.R.2617 - 117th Congress (2021-2022)". www.congress.gov.
- ^ Waddell, Melanie. "Secure 2.0 Act: A Timeline". ThinkAdvisor.
- ^ "Key tax and retirement provisions in the Secure 2.0 Act". Journal of Accountancy. January 4, 2023.
- ^ "Key tax and retirement provisions in the Secure 2.0 Act". The Tax Adviser. January 4, 2023.
- ^ a b c Dore, Kate (November 24, 2024). "These key 401(k) plan changes are coming in 2025. Here's what savers need to know". NBC News. Retrieved December 6, 2024.
- ^ "Retirement Plan Distributions after SECURE 1.0 and SECURE 2.0". IRS Nationwide Tax Forum 2023. Internal Revenue Service. August 7, 2023.
- ^ a b "Notice 2024-55: Certain Exceptions to the 10 Percent Additional Tax Under Code Section 72(t)". Internal Revenue Service. 2024.
- ^ a b Ives, Andy (January 9, 2023). "New SECURE 2.0 10% Penalty Exceptions: Domestic Abuse & Financial Emergencies". Ed Slott and Company, LLC.
- ^ a b Kearney, Brian J.; Berger, Margaret; Calloway, Matthew (March 20, 2024). "IRS gives guidance on SECURE 2.0's terminal illness distributions". Mercer.
- ^ a b Tracht, R. Randall; Bouffard, Claire E. (May 31, 2024). "SECURE Act 2.0: IRS Issues Fact Sheet on Disaster Relief Distributions and Plan Loans". Morgan, Lewis & Bockius.
- ^ "IRS issues important interim guidance on employer matching contributions made to retirement plans related to employee student loan payments". Internal Revenue Service. Retrieved August 12, 2025.
