January 17, 2023

Overview of Key Provisions of SECURE 2.0

Program Description:

President Biden signed the Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”) into law on December 29, 2019. The SECURE Act made significant changes to employer-provided retirement plans and individual retirement accounts.  The stated intent of the  SECURE Act was to amend the Internal Revenue Code of 1986 to encourage retirement savings and other purposes.  “Other purposes” included increasing the ages when individuals must begin receiving distributions from their retirement accounts (referred to as required minimum distributions) and repealing the age limitation for traditional IRA contributions, which prior to the enactment of the SECURE Act was 70 ½.  The SECURE Act also enacted provisions targeted to encouraging employers to provide more retirement benefits to their employers.

President Biden signed the 2023 Consolidated Appropriations Act (“CAA”) into law on December 29, 2022. CAA is referred to as SECURE 2.0 Act of 2022 and builds on the changes made under the SECURE Act.   The Program will present an overview of the following key provisions of  SECURE Act 2.0:

  • Changes to Required Minimum Distributions
    • For calendar year 2023, the require minimum distribution (“RMD”) age increases to age 73 for a person who attains age 72 after December 31, 2022 and 73 before January 1, 2033.
    • The RMD age will increase again to age 75 in 2033 for an individual who attains age 74 after December 31, 2032.
  • Increase to Catch-up Distributions
    • Beginning in 2025, catch-up contributions for retirement plan participants between the ages of 60 and 63 in non-SIMPLE plans will increase to the greater of $10,000 or 150% of the regular catch-up amount.
    • Starting in 2024, all catch-up contributions to non-SIMPLE plans must be Roth contributions for participants with compensation equal to or in excess of $145,000.
    • Beginning in 2025, the catch-up contribution limit for participants between the ages of 60 and 63 in a SIMPLE plan will increase from $3,000 to the greater of $5,000 or 150% of the regular catch-up amount.
  • 403(b) Plans
    • 403(b) Plans are retirement plans sponsored by tax-exempt and government employers.
    • SECURE 2.0 will conform current hardship distribution rules for 401(k) plans to 403(b) plans.
    • Beginning in 2023, 403(b) plan can join a multiple employer plan (“MEP”) or pooler employer plan (“PEP”).

 

  • Changes in Automatic Enrollment and Automatic Escalation
    • Beginning in 2025, most newly established 401(k) and 403(b) plans must meet the requirements for an eligible automatic contributions arrangement (“EACA”), including automatic enrollment with a default rate of between 3% and 10% with a 90-day unwind feature, and automatic escalation of 1% per year up to maximum of at least 10%.
  • Student Loan Repayments Treated as Elective Deferral Contributions
    • Beginning in 2024, employers can make matching contributions based on an employer’s qualified student loan payments.
  • Enhanced Tax Credits for New Smaller Plans
    • Starting in 2023, employers with 50 or fewer employers, can qualify for a start-up tax credit of 100% which was previously 50%.
Brooke Salazar

Ann O’Hara, Attorney, Dale & Eke

Ann M. O’Hara is an attorney with Dale & Eke, a law firm located in Indianapolis, Indiana. Ann assists small to mid-size businesses in their general business, real estate and federal and state tax matters.  In addition to her general business experience, Ann advises employers on tax compliance issues in connection with their qualified retirement plans, such as 401(k) plans and profit-sharing plans. Ann also represents individuals on  estate planning matters.  Ann is a frequent speaker on complex estate planning topics such as IRA Trusts, business succession and charitable planning.

While completing her law degree from Indiana University Robert H. McKinney School of Law, Ann was a Tax Analyst for the Indiana Inheritance Tax Division of the Indiana Department of Revenue.  Ann also served as Director of the Corporations Division of the Indiana Secretary of State’s Office.

Ann received her Bachelor of Science in Finance with honors from Saint Joseph’s College. Ann is admitted to the bar in Indiana and is admitted to practice before the Indiana Supreme Court, the U.S. District Courts for the Northern District of Indiana, and the Southern District of Indiana.

Ann volunteers and is a member of the Board of Directors for Meals on Wheels of Hamilton County. Ann also serves on the Board of Directors of OneZone Chamber of Commerce, and the Humane Society of Hamilton County.

Email: aohara@daleeke.com

We're sorry, we are no longer taking online registrations.