What You Need to Know
- The bill boosts the RMD age from 72 to 75 over 10 years.
- It requires 401(k) and 403(b) plans to automatically enroll participants unless they opt out.
- It would open the door to more ETF investments in annuities.
The House Ways and Means Committee on Wednesday passed by voice vote H.R. 2954, the Securing a Strong Retirement Act of 2021, dubbed the Secure Act 2.0, which raises the required minimum distribution age from 72 to 75, expands automatic enrollment in retirement plans and enhances 403(b) plans, among other provisions.
The bill now moves to the full House.
“I am really proud of this bipartisan work,” Committee Chairman Richard Neal, D-Mass., said Wednesday during the markup. Secure Act 2.0, will “help Americans prepare for a financially secure retirement.”
Noting that retirement security has been one of his priorities as chairman of Ways and Means, Neal stated that “the retirement crisis in America is real and will only worsen unless we make saving easier and do more to encourage workers to begin planning for retirement earlier.”
The COVID-19 pandemic, Neal continued, “has only exacerbated our nation’s existing retirement crisis, further compromising Americans’ long-term financial security. In addition to meeting Americans’ most pressing needs now, we must also take steps to ensure their well-being further down the road.”
With Secure Act 2.0, “we build on the landmark provisions in the Secure Act, enabling more workers to begin saving earlier and giving them peace of mind as they plan for the future.”
The Ways and Means Committee “had great success in working together” to enact The Setting Every Community Up for Retirement Enhancement (Secure) Act of 2019 in the last Congress, which he called “the most significant retirement legislation to become law in over a decade.”
Thanks to the Secure Act, he continued, “four million more Americans now have the opportunity to save at work and an estimated 600,000 to 700,000 new retirement accounts will be formed.”
In addition to expanding coverage and increasing retirement savings, the sweeping Secure Act 2.0 also allows hardship withdrawals in cases of domestic abuse and simplifies and clarifies retirement plan rules. Provisions included in Secure Act 2.0 include:
1. Increases RMD Age
Under current law, participants are generally required to begin taking distributions from their retirement plans at age 72, an increase ushered in by the Secure Act.
Secure 2.0 increases the RMD age further to 73 starting on Jan. 1, 2022; to 74 starting on Jan. 1, 2029; and 75 starting on Jan. 1, 2032.