Are More Changes Ahead for Retirement Savings? By Brendan T. Hayes

Since Congress first passed the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) in 2019, it has been working on a secondary package of regulations to further expand taxpayers’ access to workplace retirement plans and improve their financial security during their golden years. The proposed regulations, commonly referred to as Secure Act 2.0, today includes three separate bills that lawmakers are currently addressing.

Secure Act 2019

• As a refresher, the original legislation passed by the Secure Act in 2019 accomplished the following goals:
• Raised the age to 72 when taxpayers must begin taking annual required minimum distributions (RMDs) from their 401(k)s and traditional IRAs;
• Allowed working taxpayers older than 70½ to continue making annual contributions to traditional IRAs;
• Provided an opportunity for qualifying part-time workers to participate in workplace retirement savings plans;
• Allowed plan participants to take penalty-free early withdrawals for a child’s birth or adoption;
• Made it easier and less costly for small businesses to offer retirement benefits to their employees;
• Increased the default automatic enrollment contribution limits; and
• Allowed employers to expand their plans investment options to include guaranteed annuities

Secure Act 2.0

Earlier this year, the House passed the Securing a Strong Retirement Act of 2022 and sent it to the Senate, which has subsequently drafted and approved comparable bills, which include the Enhancing American Retirement Now (EARN) Act and the Rise & Shine Act. Following are some of the key provisions included in the three bills, which legislators will now look to reconcile into a final package of regulations:

• Raise the age when taxpayers would be required to take RMDs from tax-deferred retirement plans to age 73 in 2023, 74 in 2030, and 75 in 2033;
• Increase the amount and age at which plan participants may make catch-up contributions and treat them as taxable Roth contributions that participants may withdraw free of tax in retirement;
• Increase the amount plan participants may take as tax-free qualified charitable distributions;
• Lower the threshold part-time workers must meet to be eligible for participation in workplace retirement plans;
• Allow employers to make matching contributions to plans based on employees’ student loan repayments;
• Increase the retirement plan tax credit to 75% of qualified startup costs and extend it to employers with 25 or fewer employees and authorize the formation of 403(b) pooled employer plans (PEPs) for nonprofits, public educational organizations and religious institutions;
• Create a starter-401(k) program that makes it easier and less costly for small businesses and startups to offer employees retirement savings benefits.
• New Starter K legislation (which could create retirement plans that streamline regulations and costs for small businesses and startups)
• Allow employers to make matching contributions to employee’s retirement savings plans based on the amount of workers’ student loan repayments; and
• Improve employers’ auto-enrollment efforts and create a national database of “lost” retirement accounts to ensure plan participants receive the benefits to which they are entitled.

The professionals with Provenance Wealth Advisors keep up with proposed legislation to ensure clients have in plan the appropriate strategies and structure required to maintain tax
efficiency while building and protecting their wealth.

About the Author: Brendan T. Hayes is a financial planner with Provenance Wealth Advisors, an Independent Registered Investment advisor affiliated with Berkowitz Pollack Brant Advisors +
CPAs and a registered representative with Raymond James Financial Services. He can be reached in the firm’s Boca Raton, Fla., office at (561) 361-2001 or via email at info@provwealth.com.
Provenance Wealth Advisors (PWA), 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888.

Brendan T. Hayes is a registered representative of and offers securities through Raymond James Financial Services, Inc., Member FINRA/SIPC.

Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors + CPAs. PWA is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc., and Provenance Wealth Advisors.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of the advisors of PWA and not necessarily those of Raymond James. You should discuss any tax or legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation. The information contained in this report has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.

401(k) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty. Investments mentioned may not be suitable for all investors. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

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Posted on August 3, 2022