Secure Act 2 is now law. Here’s a synopsis

[Beancounter]

https://www.whitecoatinvestor.com/secure-act-2-0/
 

This article summarizes nicely some of the more important aspects of the Secure Act 2 that was recently passed by Congress and how it affects individuals.  
 

And please!  Let’s avoid any commentary on whether it’s a good piece of legislation or not.  That’s a moot point now.  It’s the law for better or worse.   I’m simply providing a link to an article for those individuals who like to keep up with options available to them as they relate to their personal finances.  

[Kevin Slater]

There are a lot of interesting little (and not so little) changes in there.  For example

• some RMD changes
• even higher catch-up contributions for ages 60 to 63 (starting in 2025)
• solo 401s can now be established and funded by employee contributions after the calendar year but before the filing deadline (starting with tax year 2023-- drat!)
• SEP and SIMPLE IRAs can now be Roth

Thanks for posting.

Kevin Slater

[BuffaloKyle]

The one that affects me is the Saver's Credit will now be a Saver's Match:

ΔSections 103 and 104: Changed Saver's Credit to Saver's Match

The Saver's Credit, for low earners contributing to retirement accounts, is no longer a deduction but a federally funded match into the account. It can be as much as a 50% match on the first $2,000 contributed (so, $1,000 total) and phases out between $20,500-$35,500 ($41,000-$71,000 MFJ). This is one more reason for residents—at least married residents—to contribute to their Roth IRAs. The match has to be repaid to the Treasury if you pull the money out before retirement. Starts in 2027.

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The Saver's Credit as it is now is a non-refundable credit and I never owe taxes so I don't get anything out of it. So this will definitely be nice to have a good extra chunk of money going directly into my 401k account. Just stinks it's still a long time off.

[handiacefailure]

Something I didn't see mentioned in the article that I like is that Roth 401K employer  match's can now go in your Roth account instead of your traditional 401k, you just have to pay tax on the match now.   My paycheck tomorrow will still have the match going into my traditional since I can't get ahold of anyone at our payroll provider to set up the match correctly.  

I like they increased the contribution limits but wish they would have increased the IRA limits more.   I'd rather contribute more to my Roth IRA than 401K since I have more control over the money and there are no RMD's.

Was also hoping they would eliminate RMD's on roth 401Ks since it's post tax income anyway.  

[+ Vegas_Millennial]

14 hours ago, handiacefailure said:

... I'd rather contribute more to my Roth IRA than 401K since I have more control over the money and there are no RMD's.

Was also hoping they would eliminate RMD's on roth 401Ks since it's post tax income anyway.  

When you separate from your employer, you can roll the Roth 401k into your Roth IRA, and then the Required Distributions go away!