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IRA Financial Blog

Retirement Legislation – Episode 292

Adam Talks

In this episode of Adam Talks, IRA Financial’s Adam Bergman Esq. discusses new legislation introduced for retirement accounts, specifically an update to SECURE Act 2.0.

About a month ago, Senators Rob Portman and Ben Cardin reintroduced the Retirement Security and Savings Act, dubbed SECURE Act 2.0. This is a bipartisan piece of retirement legislation looking to piggyback on the success of the original SECURE Act. The bill looks to strengthen the retirement system, especially for small business owners and those in lower income brackets. Obviously, we think this is a great way to help Americans save for the future.

New Retirement Legislation – What’s in the Bill?

With over 50 provisions in the legislation, there’s a lot to consider. Adam discusses the most interesting ones, which we will touch up on this article.

Small Business Provisions

Part of the bill includes incentives for businesses to offer better retirement plans and also increase participation among employees. If you have a small business, offering a good retirement plan is attractive for potential employees. The better the benefits you offer, the better employees you will get and retain. Here are some of the popular provisions in the Act:

New Automatic Enrollment Safe Harbor – Currently, the automatic enrollment starts at 3%, with auto escalation up to 6%. The new retirement legislation would start at 6% and increase by one percent until it reaches 10%.

Matching Contributions – A match would be required up to 10% of each non-highly compensated employee. 100 cents on the dollar up to 2% of his or her pay, 50 cents on the dollar for the next 4% and 20 cents on the final 4%.

Tax Credit – A special tax credit would apply to small business owners (less than 100 employees) who implement the new safe harbor plan. The credit would apply to matching contributions, with some limits in place.

Part-Time Eligibility – Under the SECURE Act, a part-time employee could work 500 hours over three consecutive years to be eligible for a retirement plan. The new legislation would cut that down to two years.

Other Provisions

Saver’s Credit – The credit would now be refundable under the new bill. The credit would be contributed directly to a retirement plan or Roth IRA. To receive the Saver’s Credit, you must be at least 18 years old, not claimed as a dependent and not be a student. You could receive up to $2,000 (doubled for married couples).

Non-spouse Beneficiary – It would give additional rollover option for non-spouse beneficiaries of an Inherited IRA. These beneficiaries now have the option of the 60-day rollover.

RMD Age – The SECURE Act increased the age for when mandatory distributions must be made from most traditional retirement plans from 70 1/2 to 72. The new bill would further increase it to 75 by the year 2032.

IRA Catch-Up – The catch-up contribution limit for IRAs has remained $1,000. The bill would now index this amount with respect to the regular IRA limit for those who are 50 and older.

Higher Catch-Up – In addition to the catch-up contribution one receives at age 50, the bill would introduce 2nd one once you reach age 60. The limit would increase to $10,000 for 401(k) plans and $5,000 for SIMPLE plans.

SIMPLE IRA – The bill would allow SIMPLE IRAs to be offered as Roth, in addition to traditional, pretax plans.

RMD Penalty – If you fail to take your RMD in a given year, you are subject to a 50% penalty on the amount that should have been withdrawn. That penalty is reduced to 25%.

RMD Exception – As mentioned earlier, you must start distribution from your retirement plan at age 72 (the bill would extend that to 75). However, if you have a total balance of under $100,000, you will not be required to take mandatory distributions.


This new bipartisan retirement legislation seems to be a win/win for both savers and employers. Obviously, the bill will have comments from both sides of the aisle, but with support on both sides, we’re likely to see SECURE Act 2.0 pass in some form or another. It’s expected to be enacted before the end of the year. Of course, the COVID-19 pandemic has been at the forefront of the new president. However, there seems to be light at the end of that tunnel, and more legislation should be coming in the near future.

We appreciate everyone who listens to Adam Talks! Be sure to check out all of our podcasts, most done by IRA Financial President and CEO, Adam Bergman, on a weekly basis. We’ll see you next time!


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