In a Might 23 letter to Treasury Secretary Janet Yellen and Inner Income Service Commissioner Daniel Werfel, a number of members of the Senate Finance and Home Methods and Means committees expressed their intention to make some technical corrections to provisions within the SECURE 2.0 Act.
4 Provisions
The letter recognized 4 provisions that require technical corrections:
- Age for required minimal distributions (RMDs) to start. The letter explains that Congress supposed to extend the relevant age for RMDs from 72 to 73 for people who flip 72 after Dec. 31, 2022 and who flip 73 earlier than Jan. 1, 2033, and to extend the relevant age from 73 to 75 for people who flip 73 after Dec. 31, 2032. However the provision relating to the rise from age 73 to age 75 may very well be learn to use to people who flip 74 (somewhat than 73) after Dec. 31, 2032, which is inconsistent with Congressional intent.
- New credit score for employer contribution to pension plans. The letter states that SECURE 2.0 Act will increase the credit score for small employer pension plan startup prices (startup credit score) partly by permitting eligible employers a credit score for a portion of employer contributions made to the plan. The supply may very well be learn to topic the extra credit score for employer contributions to the greenback restrict that in any other case applies to the startup credit score. Nonetheless, Congress supposed the brand new credit score for employer contributions to be along with the startup credit score in any other case out there to the employer.
- Inclusion of Roth particular person retirement accounts in financial savings incentive match plan for workers (SIMPLE) and simplified worker pension (SEP) plans. The letter explains that Inner Income Code Part 601 of SECURE 2.0 permits SIMPLE IRA plans and SEP plans to incorporate a Roth IRA. Part 601 may very well be learn to require contributions to a SIMPLE IRA or SEP plan to be included in figuring out whether or not a person has exceeded the contribution restrict that applies to contributions to a Roth IRA. Nonetheless, Congress supposed to retain the end result underneath the legislation because it existed earlier than SECURE 2.0 Act was enacted relating to SIMPLE IRA and SEP contributions (considering that Part 601 permits SIMPLE IRA and SEP plans to incorporate a Roth IRA). Thus, Congress supposed that no contributions to a SIMPLE IRA or SEP plan (together with Roth contributions) be taken into consideration for functions of the in any other case relevant Roth IRA contribution restrict.
- Replace to catch-up contribution allowances. The letter states that IRC Part 603 of SECURE 2.0 Act requires catch-up contributions underneath a retirement plan to be made on a Roth foundation, for taxable years starting after 2023, if the participant’s wages from the employer sponsoring the plan exceeded $145,000 for the previous calendar 12 months. A conforming change to Part 603 is perhaps learn by some to disallow catch-up contributions (whether or not pre-tax or Roth) starting in 2024. Congress didn’t intend to disallow catch-up contributions nor to switch how the catch-up contribution guidelines apply to staff who take part in plans of unrelated employers. Quite, Congress supposed to require catch-up contributions for individuals whose wages from the employer sponsoring the plan exceeded $145,000 for the previous 12 months to be made on a Roth foundation and to allow different individuals to make catch-up contributions on both a pre-tax or a Roth foundation.
