To be frank, you probably shouldn’t care… much. Here’s why: A lot of what the SECURE Act touts is better than it sounds. There are no groundbreaking provisions that will change your financial picture; instead, the law consists of a collection of small changes that might make a difference (for some), but not all.
The big picture is that the newly passed SECURE Act makes changes around the ability to save more (depending on your age and circumstances). However, there aren’t many things you need to do to adjust or implement these changes. For example, our software automatically adjusts to account for the new age range that requires minimum distributions. Perhaps, it’s worthing noting, but no action (on your part) is needed.
But, for those who are curious, here’s a brief overview of the latest iteration of the Setting Every Community Up for Retirement Enhancement (SECURE) Act. While the act itself includes 92 new provisions, we’re highlighting the most noteworthy:
Required Minimum Distributions (RMDs) are now required at age 73, not 72. This age minimum is also scheduled to increase again to age 75 beginning in 2033. Additionally, penalties for failure to take an RMD will decrease from 50% to 25%.
Starting a new job? Your employer will may now automatically enroll eligible employees into their 401(k) or 403(b) plans. Existing plans are not required to auto-enroll new employees and there are some exceptions including businesses with less than 10 employees, businesses formed within the last three years, and religious organizations.
Starting in 2024 you can roll over your 529 plans into a Roth IRA. However, there’s a $35,000 lifetime cap and the annual Roth IRA contribution limits remain in place; your annual contributions will still be capped at the annual IRA contribution limit.
Catch-up contribution limits are increasing. What this looks like depends on your age and your financial picture. Contact your financial planner for personalized insight.
For a deeper dive, check out this write-up on Investopedia.