10 Secure 2.0 Act Measures Included in $1.7B Spending Bill

Retirement experts are busy digesting the 100 pages of the Setting Every Community Up for Retirement Enhancement (Secure) 2.0 Act, which has been included in the $1.7 billion omnibus spending bill.

“Asssuming the bill passes, and I believe it will, changes to retirement planning will begin” as early as Jan. 1, Jeff Bush of The Washington Update told ThinkAdvisor Tuesday in an email.

“Secure Act 2.0 is a broad-ranging bill designed to give savers more access and flexibility in retirement savings,” Bush said. “It’s a good enhancement for retirement savers and offers some interesting planning opportunities for advisors.”

Added Bush: “There will be additional planning opportunities when we have time to dig in further and as the final rules are created.”

J. Mark Iwry, the head of national retirement policy during the Obama-Biden administration who’s now a nonresident senior fellow at the Brookings Institution, told ThinkAdvisor Tuesday in another email that “Secure 2.0 will get to ride on the ‘omnibus’ and not be thrown under it. There’s a lot in this grab bag — it’s significantly more extensive than its predecessor, Secure 1.0 — for plan sponsors, asset managers, advisors, recordkeepers, and other industry service providers, as well as a number of meaningful benefits for savers and plan participants.”

See the gallery for 10 Secure Act 2.0 measures included in the bill, as described in a section-by-section breakdown from Senate Finance Committee Chairman Ron Wyden, D-Ore., circulating on Capitol Hill.

Section 101: Expands automatic enrollment in retirement plans.

Requires 401(k) and 403(b) plans to automatically enroll participants in the respective plans upon becoming eligible (the employees may opt out of coverage). The initial automatic enrollment amount is at least 3% but not more than 10%. Each year thereafter, that amount is increased by 1% until it reaches at least 10%, but not more than 15%. All current 401(k) and 403(b) plans are grandfathered.

Section 107: Increases RMD age.

The Secure Act of 2019 increased the required minimum distribution age to 72 from 70 1/2. Section 107 further increases the RMD age to 73 starting on Jan. 1, 2023 — and increases the age further to 75 starting on Jan. 1, 2033.

Section 108: Indexes IRA catch-up contribution limit to inflation.

As it stands now, the limit on IRA contributions is increased by $1,000 (not indexed) for individuals 50 and older. Section 108 indexes that limit and is effective for taxable years beginning after Dec. 31, 2023.

Section 109: Higher catch-up limit to apply at age 60, 61, 62, and 63.

The limit on catch-up contributions for 2021 is $6,500, except in the case of SIMPLE plans, for which the limit is $3,000. This section increases these limits to the greater of $10,000 or 50% more than the regular catch-up amount in 2025 for individuals who have attained ages 60, 61, 62 and 63. The increased amounts are indexed for inflation after 2025. The measure is effective for taxable years beginning after Dec. 31, 2024.