Last week, the closely divided U.S. Congress passed its much-anticipated omnibus spending bill, and President Joe Biden signed the legislation ahead of the Dec. 30 deadline.
Much to the satisfaction of the U.S. retirement planning industry, the legislation included the Setting Every Community Up for Retirement Enhancement (Secure) 2.0 Act of 2022. The Secure 2.0 framework features more than 100 individual provisions aimed at modernizing and improving key aspects of the U.S. retirement planning system.
As the advisory community digests the reforms set to take effect over the next several years, a new video summary published by Carson Group Managing Partner Jamie Hopkins highlights many of the most important and interesting provisions for advisory professionals to understand.
Starter 401(k)s
According to Hopkins, the new "Starter 401(k)" provisions could be a real game changer in the context of advisors serving small-business owner clients. Put simply, Starter 401(k)s will allow small businesses to deliver a useful retirement solution to employees while keeping both liability and costs down.
Retirement Plan 'Lost and Found'
Additionally, the creation of a national lost and found registry and system for retirement account identification is one of the best workplace-focused changes in the bill, Hopkins says. There is a good chance that most clients who are approaching retirement have potentially significant wealth spread around multiple recordkeeping platforms from their prior employers. This new system will help people get all their retirement ducks in a row, Hopkins says.
RMD Changes 'Not the Most Important'
In the wealth management community, Hopkins says, provisions that will extend the required minimum distribution age to 73 (starting on Jan. 1, 2023) have thus far received the most attention and praise, as has the legislation's second pending boost to the individual retirement account RMD age to 75, starting in 2033.
"However, despite getting a lot of the attention, the RMD pushback is not the most important provision," Hopkins says. "Ultimately, it will impact very few people and won't change retirement security in America."
More Interesting: 529 Plan to Roth IRA Rollovers
"One of the most interesting provisions in the whole Secure Act 2.0" is the new ability to roll unused money from a 529 college savings plan into a Roth IRA.
