‘Secure 2.0’ ACT

A bill that was signed into law at the end of 2022 and introduced changes to the current retirement system includes the notable retirement provisions, such as  

  • Mandatory 401(k) enrollment for employers with more than 10 workers after 12/31/24.
  • Cath-up Contributions must be ROTH.
  • Str-up Credit increased from 50% to 100% of the qualified start-up cost effective as of 12/31/22.
  • Increasing the age when required minimum distributions (RMDs) must start to 73 in 2023 and then to 75 in 2033.
  • Reducing the penalty for failing to take RMDs from the current 50% to 25%, and in some cases 10%.
  • Allowing older retirement savers to make larger catch-up contributions.
  • Increasing the options for employers providing 401(k) matches
  • Permits withdrawal to pay for “unforeseeable or immediate financial needs relating to necessary personal or family emergency expenses.
  • The key characteristics are:
    • There is no 10% penalty for early withdrawal.
    • Amount is limited to $1,000 (or f the account less than $2,000, the amount that exceeds $1,000)
    • Withdrawal account can be repaid to the Plan within 3-year period.
    • No subsequent emergency withdrawals from the same unless the repayment is made to the Plan or IRA account.
  • Changing the RMD rules for Roth 401(k) accounts
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