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Legislation Affecting Retirement

by | Apr 1, 2022 | Bulletins

In a close-to-unanimous vote (414 to 5), on Tuesday the House of Representatives passed “SECURE 2.0,” a bipartisan bill focused on improving the U.S. retirement savings system. This bill would specifically help you, our clients in retirement collecting Required Minimum Distributions (RMDs), by allowing you to choose to delay RMDs, or take smaller distributions. The bill now goes to the Senate, for possible action in April.

One provision of the bill extends the age for taking a Required Minimum Distribution (RMD) from age 72 (current law) to age 73 starting in 2023. Anyone born in 1951 or later is eligible for the new date. For people born in ‘56 or later, the bill proposes to extend the RMD starting age to 74. If you are fortunate enough to have been born in ‘58 or later, you could delay the initial RMD until age 75. There are also enhanced catchup features for people born after 1957.

For younger and/or lower-earning wage earners, the bill proposes automatic enrollment in a company 401(k). A 2021 government survey found 84% of employees look favorably upon the auto feature. The government is enhancing the retirement-savings process for these earners by annual increases in the contribution amount, starting at 3% and building to 10% of salary. Other proposed features assist employees who are the victims of spousal abuse, and employees who still make payments to student loans.

The bill still has to pass the Senate and then get signed by the president. However, with such a large majority of Congresspeople from both parties voting for its passage in the House, it is very likely that a similar bill, if not this bill, will pass the Senate. We thought you would like to stay informed.


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