| 'Secure 2.0' clears Congress as part of omnibus appropriations bill, will bring more changes to U.S. retirement system | | |  | WED, DEC 28, 2022 | | | | Congress ushered in sweeping retirement changes last week as part of the massive $1.7 trillion spending bill to fund the government for the 2023 fiscal year. The House approved the package on Friday — following the Senate's nod on Thursday — and sent it to President Joe Biden for his signature.
The collection of retirement provisions, dubbed "Secure 2.0," builds on the SECURE Act of 2019. Among other updates, that legislation gave more workers access to 401(k)s, and provided more time for investors to make retirement contributions and let them grow before required minimum distributions must start.
Reporter Sarah O' Brien details some of Secure 2.0's many changes, including: - Improved worker access to emergency savings: Companies can let workers set up an emergency savings account of up to $2,500 through automatic payroll deductions. Employees will also be able to withdraw up to $1,000 from their retirement account for emergency expenses without having to pay a 10% early withdrawal penalty.
- Delayed starting point for RMDs: Secure 2.0 raises the age when savers must begin taking RMDs from certain retirement accounts from age 72 to age 73 in 2023, and then to age 75 in 2033.
- A new use for untapped college savings money: A provision would allow for tax- and penalty-free rollovers to Roth IRAs from 529 college savings accounts that are at least 15 years old, within limits.
- Bigger "catch-up" contributions: Under current law, savers age 50 and older can put an extra $6,500 annually in a 401(k). Secure 2.0 increases the limit to $10,000 starting in 2025 for savers ages 60 to 63. Catch-up amounts will be indexed for inflation.
Be on the lookout for more from the Personal Finance team as we continue digging into the legislation's changes and what they mean for you at different stages of your career.
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