Apr 11, 2023

Key Secure Act 2.0 Provisions Affecting Retirement Plans

Alert | Corporate, Tax & Transactional Alert

On December 29, 2022, President Biden signed into law The Securing a Strong Retirement Act, known as the “Secure Act 2.0”. This legislation includes provisions from the House of Representative’s initial version of Secure Act 2.0 and two Senate bills–The Enhancing American Retirement Now and the Retirement Improvement and Savings Enhancement to Supplement Health investments for the Nest Egg.    

Following are some of the significant changes made by the Secure Act 2.0.  Except where noted, these changes are effective December 29, 2022: 

  • Increases the age when required minimum distributions must begin from age 72 to age 73 and eventually to age 75. 
  • Requires catch-up contributions to be made as after-tax Roth contributions for persons with W-2 wages in the preceding year in excess of $145,000 (effective after 12/31/2023). 
  • Increases the catch-up contribution limit for persons age 60-63 (effective after 12/31/2024). 
  • Employees may elect to have employer matching contributions made as after-tax Roth contributions. 
  • For a new 401(k) plan of a sole proprietor, 401(k) contributions, as well as employer contributions, can be made by the due date of the tax return. 
  • Eliminates the requirement for pre-death required minimum distributions of Roth accounts in retirement plans (effective after 12/31/2023). 
  • Increases the start-up tax credit for small employers (100 or fewer employees) for starting a new retirement plan (effective after 12/31/2022). 
  • Amendments retroactively increasing benefits may be adopted as late as the due date of the employer’s tax return (effective 12/31/2023). 
  • Part-time employees credited with at least 500 hours of service during two consecutive years may elect to make 401(k) contributions (effective for years beginning after 12/31/2024). 

Plans must be amended for the Secure Act 2.0 by the last day of the Plan Year beginning in 2025. 

Should you have any questions, please contact the authors or the other Roetzel attorneys listed.