On Tuesday, House and Senate lawmakers unveiled the text for a massive year-end budget bill that includes bipartisan retirement savings legislation, (i.e., the SECURE 2.0 Act of 2022).
Mostly modeled after a bill that passed the House of Representatives in 2021, (some provisions come from the Senate’s EARN Act, and another bipartisan bill), the SECURE 2.0 Act of 2022 could reshape retirement tax incentives for years to come. That’s because if passed, the retirement savings package would make numerous changes to existing retirement account rules and some related tax breaks.
Some supporters of the legislation say that those changes are designed to encourage more workers to save for retirement through 401(k), 403(b), and IRA plans. Although, others have expressed concern that some provisions in the SECURE 2.0 Act of 2022 may primarily benefit high-income earners.
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SECURE 2.0 Act of 2022: Proposed Changes to Retirement Plan Rules and Tax Breaks
Some of the more than one hundred provisions in the SECURE 2.0 Act of 2022 that could impact your retirement savings in the coming year, or years, are briefly highlighted here. But stay tuned to Kiplinger for more detailed information on these, and other, aspects of the 2022 version of SECURE 2.0.
Increased Age for RMDs: Under the law as it stands now, you generally must take required minimum distributions (RMDs) from your retirement plan beginning at age 72. If passed, SECURE 2.0, 2022, would increase the required minimum distribution age to 73 beginning January 1, 2023. That’s a key RMD change you could see in the new year, but then in ten years, the RMD age would move to 75.
Small Incentives to Contribute to a Retirement Plan: Secure 2.0 2022 would allow your employer to offer small financial incentives (e.g., low-dollar gift cards) to help boost employee participation in a workplace retirement plan. This provision would become effective for plan years after the law passes (if it does).
Emergency Expense Distributions: Beginning in 2024, under the SECURE 2.0 Act of 2022, you would be allowed to take an early “emergency” distribution from your retirement account to cover unforeseeable or immediate financial needs. That emergency distribution of up to $1,000, could only be taken once during the year, but …….