SECURE Act 2.0 – Both Houses of Congress are Considering Retirement Reforms That Appear to Have Enough Bipartisan Support to Become Law Before the End of this Year

  • Bills in both the House and the Senate aim to build on the SECURE Act passed in 2019. This legislation is called Securing a Strong Retirement Act and is nicknamed SECURE Act 2.0. There is enough bipartisan support for some of these measures to become law before the end of this year.

  • A number of these reforms are in the Democrats $3.5 trillion stimulation package.

  • Progressive Democrats are hoping to use the reconciliation process to push through some of their more aggressive policy goals which likely would be blocked by Republicans in the normal legislative process. These proposals include items such as universal family and medical leave and federal support for skilled nursing facilities.

  • Only some of the retirement reforms being considered will ultimately be enacted and many details have yet to be worked out. Some of the more significant proposals are:
    • Require small employers to sponsor either an auto enroll IRA or a 401(k) plan – one of these proposals would require auto enrollment at 3 percent with auto escalation to 10 percent;
    • Move back the age for required minimum distributions from 72 to
      • 73 in 2022
      • 74 in 2029
      • 79 in 2032
    • Increase the catchup contribution limit from $6,500 to $10,000 for individuals 62, 63 and 64 years of age;
    • Give employers the option to make their contributions after tax so there would be no tax deferral for employees (not clear why anyone would elect this);
    • Allow plan sponsors to make contributions on behalf of employees not contributing to their retirement plan because they are paying off student loans (really a point of clarification as the law already allows this);
    • Allow 403(b) plans to participate in MEPs.
    • Direct the Department of Labor to issue new standards for benchmarking target date funds; and
    • Increase to $200,000 the amount that can be applied, without taking a taxable distribution, to purchase a qualified longevity annuity contract (QLAC) – the current limit is the 25 percent of the account up to a maximum of $135,000.

For any further questions, please do not hesitate to email Wellspring Financial Partners at or call 1 (844) 203-2402.

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