Page 44 - Investment Advisor June 2021

Conclusions

RETIREMENT PLANNING
By Melanie Waddell, Janet Levaux and Ginger Szala

Top 9 Retirement Changes in ‘Secure 2.0’

Bill That’s Headed to House

Also, how this new bill might mean Rothification of retirement, and why
Moshe Milevsky says decumulation advice should be worth more.

1. INCREASES RMD AGE
Under current law, participants are gen-
erally required to begin taking distribu-
tions from their retirement plans at age
72, an increase ushered in by the Secure
Act. Secure 2.0 increases the RMD age
further to 73 starting on Jan. 1, 2022; to
74 starting on Jan. 1, 2029; and 75 start-
ing on Jan. 1, 2032.

2. EXPANDS AUTO-ENROLLMENT IN
RETIREMENT PLANS
The bill requires 401(k) and 403(b)
plans to automatically enroll par-
ticipants when they become eligible;
employees may opt out of coverage. The
initial automatic enrollment amount is
at least 3% but no more than 10%, then
he House Ways and Means Americans prepare for a financially each year that amount is increased by 1%
Committee on May 5 passed secure retirement.” until it reaches 10%. All current 401(k)
Tby voice vote H.R. 2954, the Thanks to the Secure Act, he con- and 403(b) plans are grandfathered.
Securing a Strong Retirement Act of tinued, “four million more Americans There is an exception for small busi-
2021, dubbed the Secure Act 2.0, which now have the opportunity to save at nesses with 10 or fewer employees, new
raises the required minimum distribu- work and an estimated 600,000 to businesses (i.e., have been in business
tion age from 72 to 75, expands auto- 700,000 new retirement accounts will for less than three years), church plans
matic enrollment in retirement plans be formed.” and governmental plans.
and enhances 403(b) plans, among other In addition to expanding coverage
provisions. The bill now moves to the and increasing retirement savings, the 3. INDEXES IRA CATCH-UP LIMIT
full House. sweeping Secure Act 2.0 also allows Under current law, the limit on IRA
“I am really proud of this bipar- hardship withdrawals in cases of contributions is increased by $1,000
tisan work,” Committee Chairman domestic abuse and simplifies and clari- (not indexed) for individuals who have
Richard Neal, D-Mass., said during fies retirement plan rules. Provisions attained age 50. The bill indexes such Adobe Stock
the markup. Secure Act 2.0, will “help included in Secure Act 2.0 include: limits starting in 2023.

42 INVESTMENT ADVISOR JUNE 2021 | ThinkAdvisor.com