By Kyle Stuckey, CPA, PFS, CFP
New legislation that addresses several retirement and savings strategies recently passed Congress as part of the federal omnibus budget bills that made their way through the legislature toward the end of December 2022. The part of the legislation that addresses financial planning has been commonly termed the SECURE Act 2.0. It references the original SECURE Act (Setting Every Community Up for Retirement Enhancement Act) that was signed into law in late 2019.
The original SECURE Act introduced the first significant changes to retirement account and estate planning rules in decades. A few of its most memorable provisions were adjusting the individual retirement account (IRA) required minimum distribution (RMD) age from 70.5 to 72, mandating that most inherited IRAs must be distributed within 10 years, and establishing multiemployer 401(k) defined contribution retirement plans. After much debate about additional changes in the months and years since the original bill became law, we now have a bill incorporating many of those updates.
One concern legislators had noted is the low retirement savings of among most Americans. According to the Federal Reserve's Survey of Consumer Finances, the median retirement account balance in 2019 was $65,000, with Americans of retirement age only averaging $134,000. Lawmakers are concerned that a significant portion of the populace may need financial assistance in their later years in the form of additional social programs and expenditures. The goal of both SECURE Acts is to try to enhance and improve the availability and flexibility of retirement savings tools to encourage improvement in retirement savings trends.
While each of the provisions of the SECURE Act 2.0 will require further attention and care to unpack the specific applications, some of the notable highlights included in the final bill are as follows:
There will be many opportunities forthcoming in the weeks and months ahead to dig into the specific details contained in this new legislation and to uncover the implications for our clients. The PICPA, as always, will be a strong resource for quality and timely education content on these matters. In fact, several online courses are available now to get you up to speed.
Kyle Stuckey, CPA, PFS, CFP, is the founder of Verity Wealth Advisors in Mechanicsburg, Pa. He can be reached at KStuckey@VerityWA.com.
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